Banks earning higher revenues might soon face bigger license fees under a new plan from Kenya's central bank. The CBK wants to change how they charge banks, looking at overall yearly earnings instead of just counting branches. This shift would include all money banks make from loans, government securities, fees, commissions, trading currencies, and dividends. The CBK believes the current system, which has remained unchanged for decades, needs updating.
Right now, banks pay fixed amounts based on their physical locations - Sh400,000 for main offices and between Sh100,000 and Sh150,000 for each branch. The proposed rules would replace the 1994 regulations with the new Banking Fees Regulations of 2025. Under these changes, banks must pay their fees before receiving licenses and make annual payments within 15 days after publishing their audited financial statements.
Kenya's banking industry has expanded dramatically over thirty years. Total assets jumped from Sh202 billion in 1994 to an impressive Sh7.6 trillion by 2024—growing 38 times larger. Yet despite this massive growth, license fees haven't changed at all during this period. The central bank also points out that Kenya charges less than neighboring countries like Uganda, Rwanda, and Tanzania.
CBK Governor Kamau Thugge explains the need for updates comes from Kenyan banks expanding across borders and creating more complex banking groups. The central bank plans a gradual three-year rollout of the new system, starting at 0.6% of revenue, then moving to 0.8%, and finally reaching 1.0%. This step-by-step approach aims to help banks adjust without hurting their profits. The proposed rate aligns with what other regulators charge both locally and internationally.
Right now, banks pay fixed amounts based on their physical locations - Sh400,000 for main offices and between Sh100,000 and Sh150,000 for each branch. The proposed rules would replace the 1994 regulations with the new Banking Fees Regulations of 2025. Under these changes, banks must pay their fees before receiving licenses and make annual payments within 15 days after publishing their audited financial statements.
Kenya's banking industry has expanded dramatically over thirty years. Total assets jumped from Sh202 billion in 1994 to an impressive Sh7.6 trillion by 2024—growing 38 times larger. Yet despite this massive growth, license fees haven't changed at all during this period. The central bank also points out that Kenya charges less than neighboring countries like Uganda, Rwanda, and Tanzania.
CBK Governor Kamau Thugge explains the need for updates comes from Kenyan banks expanding across borders and creating more complex banking groups. The central bank plans a gradual three-year rollout of the new system, starting at 0.6% of revenue, then moving to 0.8%, and finally reaching 1.0%. This step-by-step approach aims to help banks adjust without hurting their profits. The proposed rate aligns with what other regulators charge both locally and internationally.
