The Central Bank of Kenya (CBK) has revealed that 35 of 38 commercial banks in the country violated banking rules under the Banking Act in 2025.In its Bank Supervision Annual Report, CBK said that only three commercial banks were not flagged for regulatory breaches during the year.According to the central bank, the figure represents a significant increase from 2024, when 11 commercial banks were cited for non-compliance with banking regulations."Thirty-five commercial banks were in violation of the Banking Act and CBK Prudential Guidelines as at December 31, 2025, compared to eleven commercial banks as at December 31, 2024," CBK stated.The majority of the breaches were linked to banks' implementation of the Risk-Based Credit Pricing Model (RBCPM), while other violations were also attributed to breaches of the single obligor limit and the minimum absolute capital requirement of Ksh3 billion."Most of the violations were with respect to non-compliance with the Risk-Based Credit Pricing Models (RBCPM), breach of single obligor limit and violation of the minimum absolute capital requirements of Ksh. 3 billion as at December 2025," the report added.During the year, CBK conducted targeted inspections across the commercial banking sector to assess compliance with the credit pricing framework.Following the inspections, 33 commercial banks were subjected to financial penalties, while two others faced administrative action.The report identified violations involving the amount banks could lend to individual borrowers or groups of connected borrowers, with 10 banks found in violation of Section 10(1) of the Banking Act for breaching the single obligor limit of 25 percent of core capital.On the other hand, seven banks were also found to have failed to maintain the statutory minimum core capital requirement of Ksh3 billion, contrary to Section 7(1) of the Banking Act.The regulator further identified several breaches relating to capital adequacy, with five banks failing to meet the minimum Total Capital to Risk-Weighted Assets ratio of 14.5 per cent, while four failed to meet the minimum Core Capital to Risk-Weighted Assets ratio of 10.5 per cent.CBK also identified corporate governance violations among some of the banks, with three banks found to have allowed individual shareholdings to exceed the 25 per cent limit.Another bank transferred more than five per cent of its shareholding without obtaining prior approval from the CBK.Despite the wide range of breaches, the regulator said it had taken corrective measures against the affected institutions."Appropriate remedial actions were taken on the institutions concerned by the CBK in respect of the violations," CBK said.
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