Central Bank of Kenya Ends Decade-Long Ban on New Banking Licences to Strengthen Regulatory Framework

The Central Bank of Kenya (CBK) has officially lifted its 10-year moratorium on the licensing of new commercial banks, signaling a renewed phase of regulatory confidence and sectoral growth. Beginning July 1, 2025, the apex bank will resume accepting applications for new banking licences, marking a significant shift in policy since the freeze was imposed in 2015.

The moratorium had been introduced in response to the high-profile collapses of Dubai Bank and Imperial Bank, which exposed serious governance lapses and triggered public concerns over regulatory oversight and financial stability. Since then, CBK has embarked on a series of reforms aimed at enhancing regulatory compliance, risk management, and the governance structures of financial institutions.

CBK now attributes its decision to reopen the sector to substantial improvements in Kenya’s regulatory framework, underpinned by legal reforms and strengthened supervisory tools. One of the most notable changes is the introduction of a significantly higher minimum capital requirement—from KSh1 billion to KSh10 billion—introduced via the 2024 Business Laws (Amendment) Act. This capital threshold is intended to ensure that only financially sound and well-governed institutions can enter the market, minimizing systemic risk and bolstering regulatory enforcement.

During the moratorium period, Kenya’s banking sector saw consolidation as a key strategy for stability. The number of commercial banks declined from 44 to 38 through mergers and acquisitions, including landmark transactions such as KCB Group’s acquisition of the National Bank of Kenya and Equity Group’s takeover of Spire Bank. These moves aligned with CBK’s goal of fostering resilient and efficient banking entities.

The lifting of the ban is expected to draw attention from both local and foreign investors seeking to establish a presence in Kenya’s reenergized banking space. CBK reiterated that the re-entry criteria will remain stringent, with a strong emphasis on compliance management, internal controls, and the ability to support Kenya’s evolving financial regulatory ecosystem.

This policy shift is not only poised to enhance financial inclusion and economic resilience but also aligns with broader regulatory technology trends across Africa, where innovation and compliance automation are increasingly essential for sustainable financial growth.

As Kenya reopens its doors to new banking players, the CBK aims to maintain a delicate balance between openness and oversight, ensuring that future entrants are equipped to navigate regulatory requirements, risk mitigation, and compliance audits in an increasingly complex financial environment.