The Central Bank of Kenya has published its final guidelines on the Liquidity Coverage Ratio, the Net Stable Funding Ratio, and the leverage ratio for commercial banks, setting 1 October 2025 as the deadline for compliance with the new quantitative minimums. The guidelines set minimum LCR and NSFR of 100% and a minimum leverage ratio of 4%.
Under the new requirements, banks must maintain an LCR of at least 100%, maintain an NSFR of at least 100%, and meet the new leverage ratio requirement. The guidelines are broadly aligned with Basel III principles.
CAPITAL PLANS REQUIRED FROM 24 BANKS
Separately, in February 2025 the CBK wrote to the 24 banks whose core capital was below KES 10 billion, asking them to set out how they would reach the new minimum core capital of KES 10 billion by 2029 required by the Business Laws (Amendment) Act, 2024. The instruction affects a majority of the sector by institution count, though the largest banks, which hold the preponderance of system assets, already exceed the threshold.
CONSEQUENCES FOR NON-COMPLIANT INSTITUTIONS
Non-compliant institutions face supervisory action under the Banking Act and the CBK's prudential framework.
The guidelines are issued under Section 33(4) of the Banking Act. CBK Governor Kamau Thugge has said the higher capital requirements will trigger a fresh round of mergers and acquisitions.