The Central Bank of Kenya (CBK) is pushing for a significant shift in how banking license fees are determined, proposing a new model that pegs fees on a bank’s gross annual revenue rather than the current branch-based system. If implemented, this change would see larger banks with higher earnings paying more in licensing fees, aligning Kenya’s banking regulations with international standards.
The proposed amendments to the Banking (Fees) Regulations of 2025 would replace the existing framework established under Legal Notice No. 188/1994. Under the new system, banks would be required to pay licensing fees based on their revenue streams, including income from loans, government securities, fees, commissions, foreign exchange trading, and dividends. Payments would be due annually, no later than 15 days after the publication of audited financial statements.
Currently, banks pay a fixed license fee of Sh400,000 for their head office, while branch fees range between Sh100,000 and Sh150,000, depending on location. Additionally, under the CBK Prudential Guideline, 2013, non-operating holding companies pay an annual fee of Sh500,000, and third-party agents pay Sh1,000.
CBK Governor Kamau Thugge emphasized the need for the revision, citing Kenya’s expanding banking sector and the growing complexity of cross-border supervision. Over the past 30 years, the total assets of the banking sector have surged from Sh202 billion in 1994 to Sh7.6 trillion in 2024, yet licensing fees have remained unchanged.
Comparisons with neighboring East African countries indicate that Kenya’s banking license fees are among the lowest. To bridge this gap, CBK is proposing a phased increase in fees over three years: starting at 0.6 percent in the first year, 0.8 percent in the second, and reaching 1.0 percent in the third year.
The proposed fee adjustment aims to support regulatory oversight and ensure financial stability in Kenya’s banking sector. By implementing the changes gradually, CBK intends to mitigate potential financial strain on banks while enhancing regulatory compliance and governance within the industry.
