A recent consultative paper published by the Central Bank of Kenya announced plans to revise how banks set their banking fees. This radical move will bring tremendous changes to Kenya’s financial landscape.
The changes suggested by the CBK as detailed in the Banking Regulations 2025, will come into effect once officially published in the Kenya Gazette.
The document suggests that a bank’s license fees will be based on its total revenue from the previous year as reflected in audited financial statements.
This includes income from loans, government securities, transaction fees, commissions, foreign exchange trading, and dividends. All revenue sources.
CBK maintains that this approach will ensure that banks contribute fees in tandem with their financial performance.
To retain their licenses, banks will be required to settle these fees before issuance and subsequently make annual payments no later than 15 days after publishing their audited financial statements.
Furthermore, CBK maintains that as per the Banking Act, no additional or undisclosed charges will be imposed beyond what is stipulated in the new regulations.
For over 30 years, banking license fees in Kenya have been based on the number of branches a bank operates. Banks with higher fees meant they had more branches. CBK now considers this model outdated.
“The Kenyan banking sector has grown significantly over the past 30 years. Total assets have increased by more than 38 times from Sh202 billion in 1994 to Sh7.6 trillion in 2024,” the CBK stated in its consultative paper review.
“However, despite this growth, the license fees for commercial banks have remained unchanged.”
The new suggestions tabled by CBK are likely to affect bank-customer relationships. Higher revenues for certain large banks may translate to increased license costs, which may be passed down to customers as banks make adjustments to their profitability.
If enacted, customers may witness higher transaction charges, increased loan processing fees or higher interest rates on credit.
For smaller banks, the new fee structure could encourage greater caution in lending, as their charges will be directly linked to their revenue.
This may result in stricter loan approval criteria consequently posing a challenge to individuals and small businesses to access financing.
