CBK Governor Defends New Revenue-Based Banking Fees Before Parliament

Central Bank of Kenya Governor Kamau Thugge has defended proposed regulations that would replace the long-standing flat annual licensing fee for banks with a levy based on gross revenue. Appearing before the National Assembly Committee on Delegated Legislation, he said the current framework has remained unchanged since 1994 despite major growth in the banking sector.

The draft Banking Fees Regulations 2026 would set the annual fee at 0.13 percent of gross annual revenue in 2026, rising to 0.15 percent from 2028. Gross revenue is defined to include interest income from loans and government securities, fees and commissions, foreign-exchange trading income and other items reported in audited statements. Customer deposits are treated as liabilities and are excluded.

MPs raised concerns that the change could increase the cost of banking services and that the legal foundation may be weak. Committee vice-chairperson Robert Githinji noted that the Banking Act does not define the term “banking fees,” leaving the regulations open to possible court challenge. Lawmakers also questioned how projected revenue would be verified for newly licensed banks and criticised a proposed 100 percent penalty for late payment.

Thugge told the committee that enhanced fees would strengthen the Central Bank’s supervisory capacity in areas such as cybersecurity, artificial intelligence and anti-money laundering. He linked the additional resources to Kenya’s efforts to exit international financial monitoring grey lists. For new banks without audited accounts, projected revenue remains the practical basis for the initial levy, he said.

The committee indicated it will continue scrutinising the draft and may seek views from banks, industry stakeholders and consumers before reporting to the National Assembly. The regulations were published through Legal Notice No. 81 of 2026.

A shift from branch-based to revenue-based fees reflects the evolution of banking in Kenya, where digital channels and larger balance sheets have reduced the relevance of physical branch counts as a measure of scale. Whether the higher regulatory levy will ultimately be passed on to customers remains a point of contention among lawmakers