Kenya's Business Laws (Amendment) Act, 2024, which was signed into law on 11 December 2024, raised the minimum core capital that banks must hold from KES 1 billion to KES 10 billion, with the new level to be reached in phases by 2029.
Under the schedule set out in the legislation, banks and mortgage finance companies must hold core capital of at least KES 3 billion by 31 December 2025. The threshold then rises in annual steps until it reaches KES 10 billion at the end of 2029, giving institutions a five-year transition from the previous KES 1 billion floor.
A TENFOLD INCREASE
The final threshold is ten times the previous minimum, while the interim level due at the end of 2025 is three times the old requirement. Core capital is the highest-quality layer of a bank's regulatory capital, made up principally of paid-up share capital and disclosed reserves, and is the measure the Central Bank of Kenya (CBK) uses to assess whether licensed institutions meet the statutory minimum.
The Business Laws (Amendment) Act is an omnibus measure that amends a number of business-related statutes. Its banking provisions amend the Banking Act, which sets the capital requirements that apply to institutions licensed and supervised by the CBK.
Banks and mortgage finance companies whose core capital is below the new thresholds will need to raise additional capital to comply with each step of the schedule, starting with the KES 3 billion requirement at the end of 2025 and culminating in the KES 10 billion minimum in 2029.
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