The Central Bank of Kenya (CBK) has proposed a significant overhaul of Kenya banking license fees, marking the first review of the charges in over three decades. The new framework, outlined in a consultative paper published in March 2025, aims to align the fees with international standards while ensuring sustainable regulatory oversight for the country’s rapidly expanding financial sector.
The proposed changes come amid concerns that the current licensing fees unchanged since 1990 do not reflect the exponential growth of Kenya’s banking industry. Over the past 30 years, the sector’s total assets have surged from Ksh. 202 billion in 1994 to Ksh. 7.6 trillion in 2024, with deposit volumes and loan portfolios experiencing similar growth.
Under the new proposal, Kenya banking license fees will no longer be determined by the number of bank branches but instead by a Gross Annual Revenue (GAR) methodology. This model, widely used by regulators in countries such as Uganda and Rwanda, will replace the outdated branch-based approach, which CBK argues does not account for digital banking advancements and branchless operations.
“The existing fee structure does not reflect the evolving complexities of banking supervision, particularly in cross-border and consolidated regulatory frameworks,” CBK stated in the paper. “A revenue-based approach ensures that licensing fees correspond to a bank’s financial performance rather than its physical footprint.”
The new structure will be implemented progressively over three years, starting with a fee of 0.6% of gross annual revenue in 2025, increasing to 0.8% in 2026, and reaching 1.0% by 2027.
A comparative analysis by CBK shows that Kenya’s banking license fees are significantly lower than those of its regional counterparts. In Uganda, banks pay 0.05% of their gross revenue, while Rwandan regulators impose a 0.5% charge. Countries like Malaysia and Canada levy standard set fees ranging from Ksh. 4.8 million to Ksh. 4 million, respectively.
Currently, commercial banks in Kenya pay a licence fee of KSh 400,000 for their head office. Branch fees vary based on location, ranging from KSh 100,000 to KSh 150,000. Non-operating holding companies are charged an annual fee of KSh 500,000, while third-party agents pay KSh 1,000 per year.
CBK argues that the new system will bring Kenya in line with international best practices while ensuring adequate resources for regulatory oversight. The revenue-based approach is expected to generate Ksh. 7.5 billion annually by 2027, with a minimal impact on bank profitability.
“For the purposes of these Regulations, gross annual revenue includes income from interest on loans, advances, government securities and placements, income on fees and commissions on loans and advances, dividend income, foreign exchange trading income, and any other income,” CBK noted in the statement.
The proposal has sparked debate among industry stakeholders, with concerns that increased regulatory costs could be passed on to consumers through higher banking fees. However, CBK maintains that the phased implementation will mitigate any immediate financial strain on banks.
“Compared to asset-based or deposit-based methodologies, the revenue-based approach has the least impact on profitability,” CBK noted, adding that it will only reduce overall banking profits by an estimated 3.1% at full implementation.
CBK has invited public and industry feedback on the proposal, with a submission deadline set for March 31, 2025. The final decision will be subject to approval by the National Assembly, with implementation expected to begin in December 2025.
The move underscores CBK’s commitment to strengthening Kenya’s banking sector and ensuring sustainable regulatory funding. As the country adapts to modern banking trends, Kenya’s banking license fees will now reflect the financial realities of a rapidly growing industry.
Do you have any story or press releases you want to share? Send tips to editor@envestreetfinancial.com
Follow us on Twitter, Facebook, or LinkedIn to ensure you don’t miss out on any