Kenyan banks must still reach KSh5bn core capital by 31 December; Treasury proposes 2032 for KSh10bn

Kenya's Banking Act (Cap. 488) requires banks and mortgage finance companies to hold core capital of at least KSh5 billion (about US$38.5 million at the Central Bank of Kenya (CBK) website's rate of KSh129.96 to the US dollar, posted on 9 November) at 31 December 2026. The Treasury has proposed moving the final KSh10 billion requirement to 2032, but Business Daily reported on 8 November that the Treasury had not moved the amendments to the Banking Act, leaving the industry confused.

The Act's Second Schedule, as amended by the Business Laws (Amendment) Act 2024 (Act No. 20 of 2024), sets the minimum at KSh1.0 billion at 31 December 2024, KSh3.0 billion at 31 December 2025, KSh5.0 billion at 31 December 2026, KSh6.0 billion at 31 December 2027, KSh8.0 billion at 31 December 2028 and KSh10.0 billion (about US$77 million) at 31 December 2029. Core capital is permanent shareholders' equity in the form of issued and fully paid-up common shares, plus disclosed reserves, less goodwill and other intangible assets.

Treasury Cabinet Secretary John Mbadi proposed a change in the 2026/27 budget statement on 11 June. "I will be proposing amendments to the timelines specified in the Business Laws (Amendment) Act 2024," he said. The proposal would move the final deadline from December 2029 to 31 December 2032 and drop the annual steps. The CBK had said the day before, on 10 June, that the deadlines would not be extended.

Mbadi has met CBK Governor Kamau Thugge, sources told Business Daily. "This is a simple matter; we will sit with CBK, agree and communicate," Mbadi told the paper. The CBK has told banks to keep to the original schedule. Banks with core capital below KSh5 billion have been ordered to send the CBK written explanations of how they will reach it. Thugge told the National Assembly's Finance and National Planning Committee at the end of October: "There are one or two that might struggle, but we want to hear from them on how they are going to meet that target."

As of end-June 2026, 14 banks had core capital below KSh5 billion, and seven had missed the KSh3 billion target for December 2025. The Treasury's extension would spare the 14 banks from raising at least KSh33 billion (about US$254 million) by the end of December. The CBK has warned that banks failing the thresholds could be downgraded to microfinance banks, and has taken no action yet.

Commercial banks told Mbadi that undercapitalised lenders might hold back lending to preserve funds. Raimond Molenje, chief executive of the Kenya Bankers Association, said, as quoted by Business Daily on 21 June: "Allowing a longer timeline facilitates banks to serve customers better and uninterrupted."

Kuria Kimani, chair of the National Assembly Finance and National Planning Committee, said: "A balanced implementation of the capital requirements is therefore necessary." The committee called for an approach that takes into account financial stability, competition, financial inclusion and the sustainability of locally owned banks.