By Atoyebi Nike
Kenya’s Central Bank (CBK) has penalized 11 commercial banks for breaking lending, capital, and governance regulations in 2024, intensifying pressure on lenders to align with its drive for more affordable credit.
In its latest annual report, the CBK revealed it collected KES 191 million ($1.48 million) in fines from banks and forex bureaus in the year to June, slightly fewer than the 12 institutions sanctioned in 2023. The move comes as the regulator combines stricter supervision with monetary policy to influence lending behavior.
Since February, the Monetary Policy Committee has cut the central bank rate from 13% to 9.75% to encourage borrowing. However, authorities say lenders have been slow to reduce interest rates, potentially undermining stimulus efforts.
The CBK said most 2024 breaches involved violating the rule prohibiting loans exceeding 25% of a bank’s core capital to a single borrower, a restriction nine banks failed to observe, sometimes due to capital erosion from losses. Other infractions included excessive insider lending, liquidity shortfalls, and ownership cap breaches.
Governance concerns also grew: three banks had single shareholders controlling over 25% of shares, up from one in 2023, while five failed to meet statutory capital requirements ahead of a planned 2025 increase. Three fell short of the 20% minimum liquidity ratio.
While the CBK did not disclose the names of the offending banks or their individual fines, it has started on-site inspections and warned that lenders who fail to pass on lower interest rates could face daily penalties of up to KES 100,000 ($774) per violation.
