The Central Bank of Kenya (CBK) has disclosed that 35 of the country’s 38 commercial banks breached various banking regulations in 2025.
According to CBK’s Bank Supervision Annual Report, only three commercial banks were not found to have violated banking regulations during the year.
The number of banks cited for non-compliance rose sharply from 11 in 2024, highlighting a significant increase in regulatory breaches across the sector.
"Thirty-five commercial banks were in violation of the Banking Act and CBK Prudential Guidelines as at December 31, 2025, compared to eleven commercial banks as at December 31, 2024," CBK stated.
Most of the violations involved the implementation of the Risk-Based Credit Pricing Model (RBCPM). Other breaches related to the single obligor limit and failure to meet the minimum absolute capital requirement of Ksh3 billion.
"Most of the violations were with respect to non-compliance with the Risk-Based Credit Pricing Models (RBCPM), breach of single obligor limit and violation of the minimum absolute capital requirements of Ksh. 3 billion as at December 2025," the report added.
CBK conducted targeted inspections of commercial banks during the year to assess their compliance with the credit pricing framework.
Following the inspections, 33 banks were subjected to financial penalties, while two others faced administrative action.
The regulator also identified breaches involving lending limits imposed on individual borrowers and groups of connected borrowers.
Ten banks were found to have violated Section 10(1) of the Banking Act by exceeding the single obligor limit, which restricts lending to a single borrower or group of connected borrowers to 25 per cent of a bank's core capital.
Seven banks, meanwhile, failed to maintain the statutory minimum core capital requirement of Ksh3 billion, contrary to Section 7(1) of the Banking Act.
CBK further reported breaches of capital adequacy requirements. Five banks failed to meet the minimum Total Capital to Risk-Weighted Assets ratio of 14.5 per cent, while four did not meet the minimum Core Capital to Risk-Weighted Assets ratio of 10.5 per cent.
The regulator also flagged corporate governance breaches in some institutions. Three banks were found to have allowed individual shareholdings to exceed the 25 per cent limit, while another transferred more than five per cent of its shareholding without first obtaining approval from CBK.
Despite the breaches, the central bank said it had taken corrective measures against the affected institutions.
"Appropriate remedial actions were taken on the institutions concerned by the CBK in respect of the violations," CBK said.
