CBK Lifts 10-Year Moratorium on Licensing New Commercial Banks

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After nearly a decade-long freeze, the Central Bank of Kenya (CBK) has announced it will start issuing licenses to new commercial banks from July 1, 2025.

The decision officially brings an end to the moratorium imposed in November 2015, which aimed to stabilize a banking sector shaken by high-profile collapses and regulatory concerns.

The move signals a new chapter for the industry, one that the CBK believes is stronger, more resilient, and ready for new players.

The moratorium was introduced at a turbulent time when three banks, Dubai Bank, Imperial Bank, and Chase Bank, were placed under receivership within a span of just eight months.

Their downfall exposed serious gaps in governance, risk management, and regulatory oversight, prompting the CBK to halt new licenses and shift focus toward reform.

A Decade of Reforms

In the ten years since, the CBK has rolled out sweeping changes across the financial sector. Legal and supervisory frameworks were overhauled, stricter regulations were introduced, and banks were pushed to adopt better risk management practices.

Read: Why the CBK is Proposing Changes to Bank Licensing Fees

The pause also encouraged consolidation. The number of commercial banks in Kenya dropped from 44 to 38, as larger players absorbed smaller ones.

Some notable mergers and acquisitions include Access Bank of Nigeria’s takeover of Transnational Bank in 2020, Co-operative Bank’s acquisition of Jamii Bora, and Equity Group’s purchase of Spire Bank.

Foreign interest also grew, with Egypt’s Commercial International Bank and Somalia’s Premier Bank entering the market through takeovers.

New Rules for New Entrants

To qualify for a license, new banks must meet a minimum core capital requirement of KSh 10 billion, up from the previous KSh 1 billion. This tenfold increase, introduced through the Business Laws (Amendment) Act, 2024, is designed to ensure that newcomers are well-capitalized and capable of weathering economic shocks.

According to the CBK, raising the bar for entry will help create a banking system that’s not only strong but also capable of supporting Kenya’s long-term development agenda, including large-scale infrastructure and private sector financing.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.