The Central Bank of Kenya (CBK) has proposed a sweeping overhaul of the bank licensing fees in Kenya, a shift from traditional fixed-rate models to a more dynamic structure based on gross annual revenue (GAR). In a proposal outlined under the Banking (Fees) Regulations, 2025, the CBK intends to introduce a performance-based model where licensing fees will be determined by a bank’s gross annual revenue—a departure from the flat-rate fees currently in place.
The gross annual revenue will encompass income streams such as interest on loans and advances, government securities, placement income, fees and commissions, foreign exchange trading, dividends, and other earnings as reflected in a bank’s audited financial statements from the preceding year.
According to the draft regulations, this revenue-based model will apply to both initial licensing and annual renewals, with payments due no later than 15 days after the publication of audited accounts. The changes will take effect upon gazettement and ratification by Parliament.
Historically, bank licensing fees in Kenya have been determined using fixed rates or based on the number of physical branches—a system established in 1994 through Legal Notice No. 188/1994. However, the CBK now seeks to revoke this outdated structure in favor of a model that reflects the current realities of the banking industry, which has increasingly moved toward digital platforms and reduced reliance on physical infrastructure.
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The new cbk framework will see fees gradually increase over three years:
- 0.6% of gross annual revenue by December 31, 2025
- 0.8% by December 31, 2026
- 1.0% from December 31, 2027, onward
Why the CBK May Be Considering a Change
- Modernization of the Sector: The banking industry has grown significantly, with assets expanding from KES 2.3 trillion in 2012 to over KES 7 trillion. The CBK believes it is time for regulations to keep pace with this growth.
- Rising Supervisory Costs: The cost of overseeing financial institutions has risen sharply due to emerging risks such as cybersecurity threats, cross-border financial transactions, and climate-related financial exposures. A revenue-based fee system aims to sustainably fund regulatory activities.
- Equity and Proportionality: The new system ensures that larger, more profitable banks contribute more, while smaller institutions pay less, aligning fees with each bank’s financial capacity.
- Strengthening Financial Resilience: The Treasury has backed the move as part of a broader effort to strengthen the banking sector’s ability to fund large-scale projects and promote economic stability.