The Draft Banking Fees Regulations of 2025 are set to change how banks are charged licensing and supervision fees. Instead of a uniform rate, banks will contribute a percentage of their gross annual revenue, with the percentage climbing incrementally from 0.6% in 2025 to 1.0% in 2027. The change has since elicited reactions from the Kenya Bankers Association, with concerns it will raise costs and reduce profitability. This begs the question: What do the regulations portend for ordinary Kenyans and the broader financial scene?

Breaking down the new fees

Currently, banks pay between Sh30,000 and Sh150,000 in permit fees for each branch depending on location, KSh400,000 for head office charges, and KSh500,000 for holding company charges. Under the new scheme, the fees will be calculated based on a bank’s total revenue from loans, foreign exchange, service charges, and commission. This means that large banks with high revenues now have to pay much more. For example, a bank earning KSh50 billion in revenue in 2026 will remit the Central Bank of Kenya (CBK) KSh400 million in fees using the 0.8% rate. In 2027, using the 1% rate, it will be KSh500 million. 

What this means 

Kenya has established itself as a regional financial centre, drawing domestic and foreign investments. The new charges, however, may bring in new dynamics that influence the nation’s financial system. First, foreign lenders considering expansion in Kenya may rethink due to increased costs. Even though Kenya remains a good market, increased operating costs may discourage new players. Second, small and medium enterprises (SMEs), traditionally the engine of Kenya’s economy, may struggle to obtain credit if banks become more risk-averse in lending. This can stifle entrepreneurship, job creation, and overall economic growth. The other potential effect is a rise in financial exclusion. If bank fees rise dramatically, banking services might become out of reach for some. In contrast, others might opt to hold their cash outside the formal banking sector and resort increasingly to mobile money or savings groups. This would be a reversal of financial inclusion, which has been a key part of Kenya’s economic transformation in the last decade.

The big picture

The justification for CBK’s decision is that as banks grow and generate more revenues, they should pay more towards the regulation and oversight costs. CBK says that current fees have remained unchanged since 1990 and need to reflect changes in the banking landscape, including size and the lenders’ risk profile. The underlying theory is that a more capitalised CBK can help improve financial stability and allow for better banking sector oversight. In addition, the proposed review aims to establish a license fee framework aligned with international standards and modern banking dynamics.

The future of banking in Kenya

Introducing revenue-based banking fees signals a shift in Kenya’s financial regulation approach. It forces banks to rethink their business models and adapt to a more dynamic regulatory environment. Some institutions may focus more on digital banking and non-traditional revenue streams to maintain profitability, while others may explore strategic partnerships or mergers to stay competitive. For consumers, the best strategy is to stay informed. Understanding how banks adjust their fees and policies will help customers make better financial decisions, whether choosing a more affordable bank, exploring alternative financial services, or adjusting spending habits. Ultimately, these regulations will reshape Kenya’s banking industry. How well they work will depend on whether CBK ensures a balanced approach that maintains financial stability without making banking unaffordable for the average Kenyan.