CBK Slaps 11 Commercial Banks with Over KSh 5m Penalty for Lending More to Staff, Directors

• According to the Central Bank of Kenya (CBK) Bank Supervision Annual Report 2024, 11 banks breached lending, capital, and corporate governance rules
• CBK fined the lenders for violating regulatory frameworks, such as lending more to the staff and directors than their owner's capital
• Of the 11 banks, five were fined for failing to meet the minimum statutory capital requirements

Wycliffe Musalia has over six years of experience in financial, business, technology, climate, and health reporting, providing deep insights into Kenyan and global economic trends. He currently works as a business editor at TUKO.co.ke.

Kenya's commercial banks faced tough regulatory scrutiny in the past 12 months to December 2024.

Data from the Central Bank of Kenya (CBK) Bank Supervision Annual Report 2024 showed that 11 banks were fined during the same period under review.

Why CBK fined 11 banks in 2024

Read also

Side-by-side look at the Central Bank of Kenya's FXD and IFB Treasury Bonds

The report noted that the lenders violated lending, capital, and corporate governance rules.

CBK said the banks breached 10 regulatory rules, including lending more than 25% of core capital, breach of the single obligor rule (9 banks), prohibited business (5 banks), and failure to meet the minimum core capital of KSh 1 billion (3 banks).

Other banks were fined for giving loans to staff, directors, and large shareholders, more than their owners' capital.

Other reasons for the penalty are liquidity management, corporate governance, and foreign exchange exposure.

How much did banks pay in fines to CBK?

The report did not, however, indicate which banks were fined and the amount of penalty they were supposed to pay.

According to Business Daily, the regulator imposes a fine not exceeding KSh 5 million for a banking institution that violates any regulatory framework.

For an institution, the fine is calculated to a maximum of KSh 200,000 depending on the severity of the violation.

Read also

Kenyan govt fails to release SHA payments, private hospitals demand civil servants pay cash

What to know about CBK and bank lending models

• Director of Research and Policy at the Kenya Bankers Association Samuel Tiriongo explained to TUKO.co.ke that the customer credit risk is currently high across different commercial banks.
• In June 2025, CBK cut its benchmark lending rate by 25 basis points to 9.75% from 10% reported in April to encourage private sector lending
• The banking regulator maintained its stance that it does not intend to reintroduce the interest rate cap, which was scrapped in 2019, after concerns were raised by industry players.

CBK warns banks about lending rates

Meanwhile, in February 2025, the Central Bank of Kenya (CBK) directed all commercial banks to lower loan fees based on the lending rate.

This followed the Monetary Policy Committee (MPC) meeting that lowered the Central Bank Rate (CBR)

The regulator warned banks that do not adhere to the new directives that they will face a penalty.

To ensure compliance with the Risk-Based Credit Pricing Model (RBCPM), CBK governor Kamau Thugge said the bank has begun on-site inspections, with penalties set for banks that fail to pass on cost reductions in line with recent Banking Act amendments.

Proofreading by Jackson Otukho, copy editor at TUKO.co.ke.

Source: TUKO.co.ke