CBK outlines new D-SIB rules while Kenya hikes bank capital toward KES 10bn by 2029 to bolster stability

The Central Bank of Kenya (CBK) on September 10, 2026, released a draft framework for identifying and regulating Domestic Systemically Important Banks (D-SIBs) and announced plans to raise the minimum core capital for commercial banks to 10 billion shillings by 2029. According to CBK officials, the measures aim to strengthen the stability and resilience of Kenya’s banking sector through enhanced supervision and higher capital requirements.

The draft framework, released on September 10, 2026, outlines criteria for identifying Domestic Systemically Important Banks (D-SIBs) and sets out additional regulatory and supervisory expectations for these institutions. The Central Bank of Kenya (CBK) invited public comments on the draft framework and related prudential guidelines, signaling a consultative phase before finalizing the rules, according to official CBK communications. Enquiries on the draft are directed to the Director of the Bank Supervision Department at CBK.

The Business Laws (Amendment) Act, 2024, requires banks to raise their core capital from 1 billion shillings to 10 billion shillings by December 31, 2029.

The new rules come amid a statutory increase in the minimum core capital requirement for commercial banks, mandated by the Business Laws (Amendment) Act, 2024. This legislation, enacted by Parliament and signed into law in December 2024, requires banks to raise their core capital from 1 billion shillings to 10 billion shillings by December 31, 2029. The phased approach includes incremental targets of 3 billion shillings by the end of 2025, 5 billion in 2026, 7 billion in 2027, 8 billion in 2028, and the final 10 billion shillings by 2029, according to the Act and confirmed by Fitch Ratings and other market sources.

CBK has mandated 24 banks with capital below the 10 billion shilling threshold to submit board-approved capital build-up plans detailing how they intend to meet the new requirements. The Financial Sector Stability Report 2024 shows that 22 of these banks had submitted their plans by April 1, 2025, with the remaining two, subsidiaries of foreign banks, expected to comply by April 30, 2025. These capital plans are part of a broader supervisory strategy to ensure banks progressively meet the statutory capital requirements within the set timeframe, officials said.

Non-compliance with the capital requirements carries significant penalties. The Business Laws (Amendment) Act, 2024, authorizes CBK to impose administrative fines up to 20 million shillings or three times the financial gain from breaches. Additional enforcement actions may include restrictions on operations, forced recapitalization, or merger mandates, depending on the supervisory assessment. CBK’s prudential framework links capital adequacy to ongoing risk-based supervision, with persistent undercapitalization potentially triggering heightened regulatory measures.

The capital increase aims to enhance the banking sector’s resilience by improving banks’ loss-absorbing capacity and reducing the risk of bad loans, according to Fitch Ratings and CBK’s Financial Sector Stability Report 2024. Analysts and legal experts describe the reforms as credit-positive developments designed to strengthen banks’ balance sheets and support financial stability. The capital hike may also encourage consolidation in the sector, as smaller lenders consider mergers or capital injections to meet the higher thresholds, advisory publications note.

In addition to the capital requirements, the introduction of a formal D-SIB framework focuses regulatory attention on large, systemically important banks to mitigate systemic risk within Kenya’s financial system. The framework complements the capital reforms by imposing enhanced supervisory expectations on these key institutions, CBK officials said.

In June 2026, National Treasury Cabinet Secretary John Mbadi proposed extending the deadline for achieving the 10 billion shilling core capital requirement from 2029 to December 31, 2032. Mbadi announced during his budget statement on June 11, 2026, that he would seek amendments to the Business Laws (Amendment) Act, 2024, to allow banks more time and remove the intermediate annual milestones. The extension is intended to ease pressure on lenders who argued that the original schedule could constrain credit growth to households and businesses, according to media reports. However, the current law still stipulates the 2029 deadline until any formal amendments are enacted.

The phased capital requirements and the D-SIB framework reflect CBK’s broader macroprudential objectives to strengthen Kenya’s banking sector stability and resilience. The Central Bank continues to engage with stakeholders through public consultations and supervisory directives as it finalizes the regulatory framework and monitors banks’ capital build-up progress.