PROCEDURE AND REQUIREMENTS FOR LICENSING OF COMMERCIAL BANKS IN KENYA

On 16^th April 2025, the Central Bank of Kenya (CBK) announced that with effect from July 1, 2025, it will lift the moratorium on licensing of new commercial banks which had been in place from 17^th November, 2015. 

The moratorium was imposed against a backdrop of governance, risk management, and operational challenges in the banking sector and was intended to provide space for the strengthening of the Kenyan banking sector.  Since the imposition of the moratorium, significant strides have been made in strengthening the legal and regulatory framework for the Kenya’s banking sector including increased number of mergers and acquisitions by existing players and entry of new domestic and foreign strategic investors into the banking sector. CBK has now seen it best to lift the moratorium to allow new players into the banking sector but require them to fulfil the below conditions:

1. The Central Bank of Kenya through the Business Laws (Amendment) Act, 2024, has increased the minimum core capital requirements for commercial banks to Ksh.10 billion and new entrants into the Kenyan banking sector will be required to demonstrate that they can meet this enhanced minimum capital requirement of Ksh.10 billion.
2. License applicants must contact the Central Bank of Kenya at an early stage for a preliminary meeting to discuss CBK licensing requirements and related issues.
3. Applicant must seek CBK’s approval for the use of the word “bank’’ or “finance” in their proposed name.
4. Once CBK has approved the name, apply to the Registrar of Companies for incorporation of the proposed bank, as a limited liability company.
5. Upon incorporation of the limited liability company, apply to CBK for a banking licence by submitting the following:
6. Application form for a License (Form CBK IF 1-1);
7. Fit and Proper forms for proposed directors and Chief Executive Officer (Form CBK IF 1-2);
8. Fit and Proper forms for all significant shareholders (Form CBK IF 1-3);
9. Certified copy of the certificate of incorporation of the limited liability company;
10. Certified copy of the Memorandum and Articles of Association of the limited liability company;
11. Certified copy of the Memorandum and Articles of Association of any corporate body that proposes to have a significant shareholding in the Applicant company;
12. Certified copy of the latest audited financial statements for each of the three years immediately preceding the date of the application if the applicant has been operating in any sector under any name and laws or in cases where any of the shareholders is a corporate body;
13. Where the proposed significant shareholders are natural persons, certified personal statements of affairs for the past three years;
14. Non-refundable application fee of Ksh. 5,000.00;
15. In case of an applicant is incorporated outside Kenya, notarized copy of the signed minutes of the board of the applicant or other prime oversight body passing the resolution to establish a branch or subsidiary in Kenya, an undertaking by the board or the oversight body to maintain minimum assigned capital in the proposed branch or subsidiary in Kenya as per the Banking Act and that such capital shall be in Kenya shillings, The name and contact details of a designated person(s) from the Head Office authorized to liaise with the Central Bank on the application on behalf of the institution, A letter of no objection from the home supervisory authority recommending the applicant to establish a branch or subsidiary in Kenya, A confirmation from the home country supervisor that the promoters of the foreign incorporated bank do not operate a shell bank;
16. Sworn declarations signed by every officer as specified in the application forms;
17. A feasibility study of the future operations and development of the intended business for a minimum period of three years from the date of the application including a comprehensive diagrammatic representation of the group structure, proposed organization structure for the proposed institution, Up-to-date and detailed curriculum vitae of every significant beneficial shareholder, director and any senior officer who will take part in policy making;
18. Academic and professional certificates for the directors, shareholders and all senior officers of the applicant;
19. Contact details (postal and e-mail addresses, phone contacts of at least three independent referees, one of whom should be a previous employer or business associate) for all director, shareholders and senior officials of the applicant;
20. Valid Personal Identification Number (PIN) and tax compliance certificate issued by the relevant tax authority in Kenya;
21. The latest credit report from a licensed credit reference bureau for all director, shareholders and senior officials of the applicant;
22. Certified statement of personal financial affairs for all director, shareholders and senior officials of the applicant;
23. Two recent passport-size photographs for all director, shareholders and senior officials of the applicant;
24. Schedule of all the preliminary expenses including organization costs, share-selling and brokerage costs and commission;
25. Projections of financial statements for the first three years of operations;
26. Interest rate sensitivity analysis of the projections submitted or other similar analysis of the extent to which the forecasts will change when interest rate varies (the assumptions underlying the projections and the sensitivity analysis should be stated);
27. The proposed operational arrangements of the applicant (showing details of the proposed functional divisions and units, activities to be run in-house and those to be outsourced);
28. Statistical and other data which may have been collected in respect of the area in which the applicant intends to serve including population of the area, schemes of agriculture, business, industrial development and existing banking facilities;
29. Sources and evidence of availability of capital;
30. a statement as part of the declaration in (Fit & Proper Form”, CBK IF 1-3) to the effect that the proposed capital is not from proceeds of crime or illicit activities.

Upon approval, the applicants may proceed to obtain premises, Information Technology Systems, put in place other necessary operating facilities and recruit staff for the institution.

Once the applicants are ready with their premises and systems, they should then invite the Central Bank to conduct an inspection. If the inspection is satisfactory, and prior to issuance of the license, applicant will be required to pay the prescribed annual license fees as will be directed by CBK.

Once the requisite license fees have been paid, the Central Bank places a notice in the Kenya Gazette to formally specify the institution and issue a license and the newly licensed institution is then allowed to open its doors to the public.

At A.O. WANGA ADVOCATES we are happy to assist you with obtaining the banking licence in Kenya.

For more information, please contact us on info@aowangaadvocates.com or +254794600191

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