The Central Bank of Kenya (CBK) has imposed fines on 11 commercial banks for violations in lending, capital, and governance regulations in 2024, signaling a robust push for stricter oversight amid efforts to stimulate cheaper credit. The penalties, totaling KSh191 million, targeted breaches including excessive lending to single borrowers, insider lending, ownership cap violations, and liquidity shortfalls, with three banks failing to meet the mandatory 20% liquidity ratio.
The CBK’s crackdown comes as the Monetary Policy Committee slashed the benchmark interest rate from 13% to 9.75% in 2024 to encourage lending. However, authorities noted that banks have been slow to pass these savings to borrowers, prompting heightened scrutiny to ensure compliance without compromising risk controls. Nine banks exceeded the 25% capital concentration limit for single borrowers, raising concerns about potential financial vulnerabilities.
The fines reflect a broader regulatory overhaul, with the CBK tightening rules on digital lenders and licensing over the past two years. A stringent vetting process has reduced the number of licensed digital credit providers to just over 50, emphasizing consumer protection and responsible lending. The regulator also flagged ownership concentration issues and liquidity lapses, reinforcing its commitment to a stable banking sector.
While the number of penalized institutions slightly decreased from 2023, the CBK’s tougher stance underscores its dual strategy of easing monetary policy while enforcing rigorous supervision. The regulator withheld the names of the banks and specific penalty details, citing industry sensitivity.
