The banking industry in the country is set for a radical shift after the Central Bank of Kenya (CBK) announced plans to revise banking fees, with changes expected to take effect upon publication in the Kenya Gazette.
Under the proposed Banking (Fees) Regulations, 2025, the CBK indicated that banking fees would be determined based on a bank's gross annual revenue. This will include income from loans, government securities, fees, commissions, foreign exchange trading, and dividends.
According to the CBK, the gross annual revenue will be calculated using the audited financial statements from the previous year. This, according to the regulator, will ensure that banks pay fees in proportion to their earnings.
Under the new proposals, the fees must be settled before a bank is granted a licence and will be payable on an annual basis, no later than 15 days after the publication of audited financial statements.
The CBK further clarified that under the Banking Act, no additional charges will be imposed beyond the specified fees.
Currently, the CBK calculates banking licence fees based on the number of branches a bank operates. Under this methodology, the more branches a bank has, the higher the licence fees it is required to pay.
The CBK noted that the proposal to review banking licence fees and other charges for commercial banks under the Fourth Schedule of the Banking Act was long overdue, as the last update to these fees was 33 years ago, in 1990.
"The Kenyan banking sector has grown significantly over the past 30 years. Total assets have increased by more than 38 times—from Ksh202 billion in 1994 to Ksh7.6 trillion in 2024," the CBK stated in its consultative paper review. "However, despite this growth, the licence fees for commercial banks have remained unchanged."
The Bigger Picture
The proposed revision of banking licence fees by the CBK is likely to have a ripple effect on ordinary Kenyans, particularly in terms of banking costs, accessibility, and overall financial services.
Since the proposals indicate that banking licence fees will be based on a bank’s gross annual revenue, larger banks with higher earnings may have to pay more to maintain their licences.
In response, these banks might pass on these increased costs to their customers in several different ways including raising transaction fees, loan processing fees and higher interest rates on loans and credit facilities.
In terms of loans, some institutions, particularly the less-established ones, might become more cautious with lending to avoid financial strain since the CBK would require banks to pay fees based on their revenue.
This could lead to stricter loan approval processes, particularly for small businesses and individuals. Stricter loan approval processes, make it harder for small businesses and individuals to access credit.
