Banks in Kenya penalized for loans, capital management, and governance violations by the nation's Central Bank.
The Central Bank of Kenya (CBK) carried out a stringent enforcement drive in 2024, fining 11 commercial lenders for breaching lending, capital, and governance rules. However, the specific names of these banks have not been publicly disclosed in the referenced reports and news articles.
The CBK's 2024 Bank Supervision Annual Report indicates that the fines were issued for various offences, including lending more than 25% of core capital to a single borrower, excessive insider lending, liquidity shortfalls, breaches of ownership caps, and governance lapses such as ownership limits.
The CBK's on-site inspections, part of its enforcement drive to tighten supervision and align the sector with its policy push for cheaper credit, began in June 2024. Most violations involved lending more than 25% of core capital to a single borrower, with nine banks breaching the limit. Governance lapses worsened, with three banks having individual owners controlling over 25% of shares, up from one the year before.
Since February 2024, the Monetary Policy Committee has reduced the central bank rate from 13% to 9.75% to stimulate lending. However, banks have been slow to lower their interest rates, a move that could result in daily penalties of up to KES 100,000 ($774) per violation, as warned by the CBK.
The CBK has not provided details on the specific violations that have occurred since June 2024. Five lenders failed to meet statutory capital minimums ahead of a planned increase in 2025. Losses had eroded the capital base of some banks, causing them to breach the single borrower limit.
The CBK's enforcement drive continues to focus on lending, capital, and governance rules. The CBK has not announced any new banks that have fallen below the 20% liquidity ratio. The CBK collected KES 191 million ($1.48 million) in penalties from banks and forex bureaus in the year to June 2024.
While the names of the fined banks remain undisclosed, the CBK's actions underscore its commitment to maintaining a stable and secure banking sector in Kenya. Public disclosure of fined banks by name is sometimes withheld to maintain confidentiality or regulatory discretion. To obtain the names of the fined banks, one would likely need to consult the full Central Bank of Kenya Bank Supervision Annual Report 2024 directly or official CBK press releases.
- The CBK's Bank Supervision Annual Report in 2024 shows penalties were issued to banks in the business sector, including finance, banking-and-insurance, for breaching lending, capital, and governance rules.
- The enforcement drive by the Central Bank of Kenya (CBK) in the industry of banking-and-insurance aimed at tightening supervision, resulted in fines for various offenses, such as lending more than 25% of core capital to a single borrower, excessive insider lending, and governance lapses.
