CBK ends 9-year freeze on new banks, sets Sh10Bn entry capital
Chase bank customers mill around their branch outlet following its abrupt closure over mismanagement. In an update on Wednesday, the Central Bank of Kenya said the moratorium, which was effected on 17th November, 2015 was imposed to counter a wave of governance, risk management, and operational challenges that were engulfing the banking sector then.
Kenya’s banking industry could start witnessing the setting up of new banks following the lifting of a nine-year freeze on new players by the Central Bank starting July 1, 2025.
The new players will, however, have to meet the KES10 billion minimum capital condition before opening doors to offer services to customers in East Africa’s largest economy.
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In an update on Wednesday, the Central Bank of Kenya said the moratorium, which was effected on 17th November, 2015 was imposed to counter a wave of governance, risk management, and operational challenges that were engulfing the banking sector then.
“It was intended to provide space for the strengthening of the Kenyan banking sector. Since then, significant strides have been made in strengthening the legal and regulatory framework for Kenya’s banking sector,” the CBK explained in a statement.
The Central Bank added that the decision was also influenced by the growing number of mergers of banks and a steady wave of foreign investors that were eyeing a stake in the sector.
“Notably, there have been a number of mergers and acquisitions by existing players and entry of new domestic and foreign strategic investors into the sector,” the CBK added.
However, all new entrants will have to prove their mettle before getting licensed, by showing that they can meet the enhanced minimum capital requirements. According to the Business Laws (Amendment) Act, 2024, the minimum core capital requirements for commercial banks has been set at KES10 billion, a move that policymakers believe will help strengthen the banking sector.
“Following the lifting of the moratorium, new entrants to the Kenyan banking sector will be required to demonstrate that they can meet the enhanced minimum capital requirements of KES10 billion,” CBK explained.
Furthermore, stronger and more resilient banks will be able to navigate the growing risks in the global, regional, and domestic arenas. Additionally, they will be able to support large scale financing needs to meet Kenya’s development aspirations.
