CBK lifts moratorium on licensing new commercial banks

By Newsflash Business Desk

The Central Bank of Kenya (CBK) has officially lifted a 10-year moratorium on the licensing of new commercial banks, setting the stage for fresh entrants into the financial sector.

In a press release dated April 16, 2025, CBK announced that effective July 1, 2025, it will resume issuing licenses to qualified applicants, provided they meet new capital requirements.

The moratorium, which took effect on November 17, 2015, was imposed in the wake of several banking failures and widespread governance lapses in the sector. At the time, the regulator cited the need to address deep-rooted challenges around risk management, operational inefficiencies, and regulatory compliance.

During that period, CBK turned its focus to strengthening the stability of the banking industry, tightening oversight, and implementing reforms that would restore public confidence in the sector. These included enhanced prudential guidelines, a stricter vetting process for top management, and a review of capital adequacy requirements.

Stronger capital base and stricter entry rules

The decision to lift the moratorium comes in the wake of the enactment of the Business Laws (Amendment) Act, 2024, which raised the minimum core capital requirement for commercial banks from KSh1 billion to KSh10 billion. This move is expected to ensure that new banks entering the Kenyan market are well-capitalized, sustainable, and capable of withstanding economic shocks.

“The lifting of the moratorium marks a significant step in opening up the banking sector to new investments while safeguarding its stability,” CBK stated. “New entrants will be required to demonstrate that they can meet the enhanced minimum capital requirements.”

The regulator emphasized that the lifting of the restriction follows notable progress in strengthening Kenya’s legal and regulatory banking framework. Over the past decade, the sector has witnessed increased mergers and acquisitions, entry of both domestic and foreign investors, and improved compliance with international best practices.

The CBK noted that stronger and more resilient banks will be better positioned to navigate emerging risks in domestic, regional, and global financial environments. Furthermore, these institutions are expected to play a key role in supporting Kenya’s development goals by facilitating large-scale financing in critical sectors.

The move is likely to spark renewed interest from local and international investors, potentially enhancing competition and innovation in the banking industry. It also signals CBK’s confidence in the current regulatory environment and the maturity of Kenya’s financial sector.

The reopening of the licensing window marks a new chapter in Kenya’s banking landscape, one defined by stricter entry rules, greater transparency, and a heightened focus on stability.