Kenya’s banking sector faces its most significant regulatory update in years. The Central Bank of Kenya (CBK) has invited public comment on revised rules that will reshape how banks manage risk, hold capital and report to regulators.
CBK issued the notice on Thursday, September 10, 2026, opening consultation on four sets of documents: draft revised Prudential Guidelines, Risk Management Guidelines, Guidance Notes and a new Domestic Systemically Important Banks (D-SIBs) Framework. The regulator is carrying out the review under the Central Bank of Kenya Act and the Banking Act.
What the review covers
The Prudential Guidelines set the baseline requirements banks must meet to stay financially sound. They touch every part of a bank’s operations that matters for its own stability and for the wider financial system.
The Risk Management Guidelines work alongside them, giving banks a structure for identifying, measuring and controlling the risks that come with lending, trading and holding deposits. CBK is also updating its Guidance Notes, which spell out how banks should handle specific regulatory and supervisory questions that arise between formal reviews.
“This review forms part of CBK’s ongoing efforts to strengthen the regulatory framework, enhance the resilience of the banking sector, and align Kenya’s supervisory framework with international standards and emerging best practices,” CBK said in its notice.
The centrepiece of the package is the D-SIBs Framework, which for the first time gives CBK a formal method for identifying banks whose collapse could shake the entire financial system.
Why CBK is moving now
Kenya’s banking sector has grown more concentrated and more interconnected over the past decade, with a handful of large lenders now holding outsized shares of deposits and credit. A shock to any one of them could ripple through smaller banks, businesses and households that depend on it. CBK’s push to formally designate and supervise D-SIBs brings Kenya in line with an approach global regulators adopted after the 2008 financial crisis, when the failure of large, interconnected banks nearly took down the world economy.
The revised guidelines will shape how banks handle governance, capital planning and day to day risk controls. They will also give stakeholders a formal channel to flag concerns before CBK locks in the final documents.
CBK is running the consultation under Article 118 of the Constitution and sections 4(a) and 5(3)(a) and (b) of the Statutory Instruments Act, 2013, both of which require public participation before new regulatory instruments take effect.
Plans to identify systemically important banks
The draft framework sets out, in detail, how CBK will decide which banks count as systemically important and what it will demand of them once they do.
CBK will score banks each year against five factors: size, interconnectedness with other institutions, substitutability of the services they provide, complexity of their operations and importance to the domestic economy. The assessment will run annually using data as at December 31, drawn from licensed banks and mortgage finance institutions.
Banks that cross the threshold will not find out casually. CBK will notify them in writing by the end of March each year, then publish the full list of designated D-SIBs by June.
| Requirement | Detail |
|---|---|
| Assessment frequency | Once a year, based on data as at December 31 |
| Notification to banks | By end of March each year |
| Public list published | By June each year |
| Assessment criteria | Size, interconnectedness, substitutability, complexity, importance to the domestic economy |
| Extra capital | Additional loss absorbency requirements on top of standard capital rules |
| Supervision | More frequent and more intensive on site and off site monitoring |
| Stress testing | Quarterly, covering a range of economic and financial shocks |
| Internal assessments | Annual capital and liquidity adequacy reviews, checked by CBK |
| Recovery and resolution plans | Submitted annually, due April 30 |
| Liquidity | May face higher liquidity ratios depending on funding and liquidity risk |
Designation carries real consequences. D-SIBs will need to hold more capital through additional loss absorbency requirements, on top of what standard prudential rules already demand. CBK will also step up its scrutiny of these banks, increasing the frequency and intensity of both on site inspections and off site monitoring under its Risk Based Supervision framework.
The framework pushes designated banks to test themselves more rigorously too. D-SIBs will run stress tests every quarter to gauge how well they could absorb losses from a range of economic and financial shocks. They will also carry out an Internal Capital Adequacy Assessment Process and an Internal Liquidity Adequacy Assessment Process at least once a year, with CBK reviewing the results directly.
Perhaps the most consequential requirement is forward planning for failure. Each D-SIB must draw up a recovery plan and a resolution plan, then update and submit both to CBK by April 30 every year. The goal is straightforward: give regulators the tools to intervene early and manage a crisis before it spreads, lowering the eventual cost of any failure. Depending on how funding and liquidity risks evolve, CBK may also require D-SIBs to hold higher liquidity ratios than smaller, non-designated banks.
Key drivers to watch
Several forces will determine how far reaching this review ends up being.
Consolidation in the banking sector is the most obvious driver. Mergers and acquisitions have concentrated deposits and assets among fewer, larger banks in recent years, making the failure of any single major lender more dangerous to the system as a whole. That trend gives CBK a direct incentive to formalise D-SIB supervision now rather than later.
Regional integration matters too. Kenyan banks have expanded aggressively across East Africa, and several now generate a meaningful share of earnings outside the country. Cross border exposure raises the stakes of any single institution’s distress, since a shock in Nairobi could just as easily originate in Kampala or Kigali.
Global regulatory pressure plays a role as well. The Basel Committee on Banking Supervision set out international principles for identifying and supervising domestic systemically important banks back in 2012, and Kenya’s move brings its framework closer to what regulators in India, Malaysia and other emerging markets already apply. Investors and rating agencies increasingly expect this kind of alignment before they extend favourable terms to a country’s banking sector.
Digital transformation adds another layer. Banks now depend heavily on shared payment rails, core banking systems and third party technology providers. That interconnection is exactly the kind of risk the substitutability and complexity criteria in the D-SIB framework are designed to capture.
Finally, capital and liquidity conditions in the wider economy will influence how tough the final rules turn out to be. If CBK judges systemic risk to be rising, it has room within the draft framework to push loss absorbency and liquidity requirements higher for designated banks.
How to submit comments
Members of the public can download the draft documents from the CBK website and submit feedback using the regulator’s official template.
Comments go to fin@centralbank.go.ke, with the subject line: “COMMENTS ON THE DRAFT REVISED PRUDENTIAL GUIDELINES (PGs), RISK MANAGEMENT GUIDELINES (RMGs), GUIDANCE NOTES AND THE DOMESTIC SYSTEMICALLY IMPORTANT BANKS (D SIBs) FRAMEWORK.”
The submission window closes on November 7, 2026. Anyone who prefers to submit a hard copy can post it to the Director, Bank Supervision Department, Central Bank of Kenya, P.O. Box 60000 – 00200, Nairobi.
