Kenya’s Treasury and its central bank are in talks over the timetable for new bank capital rules, after disagreeing over whether lenders should have until 2029 or 2032 to reach a core capital floor of 10 billion shillings. Treasury Cabinet Secretary John Mbadi has proposed pushing the final deadline to December 2032 and dropping the annual milestones, while Central Bank of Kenya Governor Kamau Thugge has insisted banks keep to the existing schedule, including a 5 billion shilling target due by December 2026.

Mbadi told Business Daily that the two institutions are weighing the economic impact of the rules and do not view the disagreement as a major concern. But the central bank has directed banks to keep complying with the original timetable, because the proposed change has not been accompanied by the legislative amendment needed to alter the existing framework.

Two different deadlines

The phased increase in minimum core capital was introduced by the Business Laws (Amendment) Act of 2024. Under the current law, commercial banks must hold:

• 5 billion shillings in core capital by December 2026;
• 6 billion shillings by 2027;
• 8 billion shillings by 2028; and
• 10 billion shillings by December 2029.

Mbadi first proposed the change in his June 2026 budget statement, arguing that removing the yearly steps and giving banks until the end of 2032 would protect shareholder value and investor confidence. The central bank’s position is that stronger capital buffers are needed to absorb shocks, with Thugge pointing to heightened exposure to climate-related events and cyber-security attacks, and to the cost of technology that shields banks from such threats.

Fourteen banks below the threshold

Fourteen commercial banks reported core capital below the 5 billion shilling threshold at the end of June 2026, including Middle East Bank, M-Oriental Bank and Bank of Africa. Thugge told the National Assembly’s Finance and Planning Committee that banks below the target had been asked to explain how they intend to meet it, and warned that lenders which fail to comply risk being downgraded to microfinance banks.

Industry observers note that smaller lenders fear the higher thresholds could force them to seek strategic investors or consolidation, potentially affecting competition and financial inclusion. The parliamentary committee has called for a balanced approach that safeguards competition, local ownership and access to credit while strengthening banks’ resilience. The June figures are a snapshot, not proof that the same banks remain below the threshold today, and the talks between the Treasury and the central bank are continuing. Read the full reports in Kenya Today and Kenyan Business Feed.

Frequently asked questions

What is the current bank capital deadline in Kenya? Under the 2024 amendment, banks must hold 5 billion shillings in core capital by December 2026, rising in annual steps to 10 billion shillings by December 2029.

What does the Treasury want to change? Treasury Cabinet Secretary John Mbadi has proposed moving the final 10 billion shilling deadline to December 2032 and removing the annual milestones.

What happens to banks that miss the target? The Central Bank of Kenya has warned that lenders failing to meet the minimum could be downgraded to microfinance banks, and has asked those below the threshold to explain their capital-raising plans.