The Central Bank of Kenya (CBK) penalties imposed on commercial banks and foreign exchange bureaus rose 57.6 percent to Sh93 million in the year ended June 2026, coinciding with the period when the regulator tightened sanctions for breaches of banking rules.
Latest CBK disclosures show that penalties rose from Sh59 million a year earlier, although they remained below the Sh191 million recorded in 2024. The CBK did not disclose the identity of the banks it fined.
Penalties stood at Sh66 million in 2023 before surging to Sh191 million in 2024. They then fell to Sh59 million in 2025 before the latest rise.
The increased penalties came during the period CBK implemented a new penalty framework that made sanctions more effective and dissuasive.
The Banking (Penalties) Regulations, 2025, set out specific penalties for violations of the Banking Act, with the framework providing for penalties linked to the seriousness of breaches and the financial benefit obtained or loss avoided.
The rules cover a wide range of violations, including breaches of minimum capital and liquidity requirements, excessive lending, failure to disclose loan terms and non-compliance with CBK directions.
The regulations commenced in July last year, with CBK providing for penalties of up to Sh20 million or three times the gross monetary gain made or loss avoided.
“The amendment ensures penalties are effective, proportionate, dissuasive, aligned with global standards, and entrench a compliance culture in banks,” the CBK said in its annual report.
In the year ended December 2025, CBK stepped up scrutiny of how lenders price credit following reductions in the Central Bank Rate (CBR). For instance, CBK said in its 2025 annual supervision report that it fined a record 33 commercial banks after inspections found breaches linked to the implementation of its risk-based credit pricing model.
The 33 lenders represented 86.8 percent of the 38 commercial banks inspected, while two other banks faced administrative action. Only three banks were found to be fully compliant with the model.
The inspections followed repeated reductions in the CBR and pressure on lenders to pass lower funding costs to borrowers. CBK had cut the benchmark rate seven times between August 2024 and August 2025, bringing it down from 13 percent to 9.5 percent.
The enforcement push coincided with the rollout of the revised risk based credit pricing model, which uses the Kenya Shilling Overnight Interbank Average (Kesonia) as the common reference rate for variable rate loans.
The banking regulator last year repeatedly pressured banks to lower borrowing costs and match cuts in the benchmark rate while threatening daily fines.
