The news
- The Central Bank of Kenya (CBK) fined 11 banks for breaches in lending, capital, and governance in 2024.
- The CBK also flagged liquidity and ownership lapses.
- The crackdown complements policy rate cuts aimed at cheaper credit.
- The CBK has also tightened rules on digital lenders and licensing in recent years.
Kenya’s banking watchdog is pairing easier monetary policy with tougher supervision. The Central Bank of Kenya (CBK) fined 11 commercial lenders for breaking lending, capital, and governance rules in 2024. This signals that the regulator wants lower policy rates to translate into cheaper credit, not looser risk controls.
The penalties followed a year in which the Monetary Policy Committee cut the benchmark rate from 13% to 9.75% to stimulate lending. Yet authorities say banks have been slow to pass the easing on to borrowers.
Nine banks lent too much money to a single customer or business, going over the limit that stops one borrower from holding more than 25% of a bank’s key capital. The CBK also cited excessive insider lending, breaches of ownership caps, and liquidity shortfalls, with three lenders failing to meet the 20% liquidity ratio.
The regulator collected KSh191 million in fines from banks and forex bureaus, a slight drop in the number of penalised institutions from 2023, but still consistent with a tougher stance. CBK did not name the lenders or disclose individual penalties, citing industry sensitivity.
This push fits a wider pattern as the CBK has spent the past two years cleaning up credit markets, from capping ownership concentrations in banks to reining in digital lenders.
Since rolling out a strict licensing regime, the number of approved digital credit providers has fallen sharply, with the CBK emphasising consumer protection and responsible lending. The vetting drive has whittled licenses to just over 50, underscoring the regulator’s appetite for pruning non-compliant players.
As the economy seeks lower-cost credit, supervisors will enforce concentration, capital, and liquidity rules more aggressively. The immediate impact could be tighter underwriting and renewed capital planning.
Over time, adherence to limits and improved governance should reduce systemic risk and give the CBK more confidence that monetary easing will land where it matters— business borrowers and households.
