The Central Bank of Kenya (CBK) fined a record 33 commercial banks for defying the regulator’s calls to cut their loan rates in line with the reduced benchmark rate, denying borrowers cheaper credit.
The penalties followed on-site inspections of all 38 commercial banks, after which the CBK cracked the whip to force lenders to match their lending rates to the reduced Central Bank Rate (CBR).
The CBK did not disclose the identity of the banks in breach of the Banking Act provisions or the fines slapped on the 33 lenders, which represent 86.8 percent of the industry.
The apex bank said it took unspecified administrative actions on two other banks, while only three were fully compliant with the risk-based credit pricing model (RBCPM).
Between August 2024 and August 2025, the CBK cut the benchmark rate or CBR seven times by 3.5 percentage points to 9.5 percent from a 22-year high of 13 percent that lasted for about seven months.
Only six lenders — Citibank N.A Kenya, Absa Bank Kenya, Credit Bank, Standard Chartered Bank Kenya, Stanbic Bank Kenya and Victoria Commercial Bank — cut their overall lending rates to match or exceed the benchmark.
The banking regulator last year repeatedly put pressure on banks to lower borrowing costs and match cuts in the benchmark rate while threatening daily fines.
‘CBK conducted target inspections in 2025 on the implementation of the RBCPM rolled out in 2019 by all commercial banks. Following the inspections, penalties were levied on 33 banks, and administrative actions were taken on two banks,’ the CBK said in its latest annual banking supervision report.
‘Three banks were fully compliant with the RBCPM.’
The penalties on credit pricing breaches raised the number of commercial banks in violation of the Banking Act and CBK Prudential Guidelines in the year ended December 31, 2025 to 35, compared to 11 previously.
CBK Governor Kamau Thugge accused banks of failing to cut loan rates even after the CBR was trimmed from 13 percent in August 2024 to 10.75 percent in February 2026.
This triggered on-site inspections of banks up to June 2025 by the CBK to review the movement of lending rates.
Banks faced fines of Sh20 million or three times the monetary gain made from ‘overcharging’ borrowers, with the regulator leaning on the punitive penalty.
The banks also risked additional daily penalties of up to Sh100,000 for every case or implication for each loan account, with the executives liable for a Sh1 million
The banking sector regulator hinged its actions on Section 55 of the CBK Act.
‘The (Monetary Policy) Committee observed that the CBR had been lowered substantially since August 2024, yet lending rates have only declined marginally,’ Dr Thugge said in February last year.
The apex bank said it took unspecified administrative actions on two other banks, while only three were fully compliant with the risk-based credit pricing model (RBCPM).
Between August 2024 and August 2025, the CBK cut the benchmark rate or CBR seven times by 3.5 percentage points to 9.5 percent from a 22-year high of 13 percent that lasted for about seven months.
Only six lenders — Citibank N.A Kenya, Absa Bank Kenya, Credit Bank, Standard Chartered Bank Kenya, Stanbic Bank Kenya and Victoria Commercial Bank — cut their overall lending rates to match or exceed the benchmark.
The banking regulator last year repeatedly put pressure on banks to lower borrowing costs and match cuts in the benchmark rate while threatening daily fines.
‘CBK conducted target inspections in 2025 on the implementation of the RBCPM rolled out in 2019 by all commercial banks. Following the inspections, penalties were levied on 33 banks, and administrative actions were taken on two banks,’ the CBK said in its latest annual banking supervision report.
‘Three banks were fully compliant with the RBCPM.’
The penalties on credit pricing breaches raised the number of commercial banks in violation of the Banking Act and CBK Prudential Guidelines in the year ended December 31, 2025 to 35, compared to 11 previously.
CBK Governor Kamau Thugge accused banks of failing to cut loan rates even after the CBR was trimmed from 13 percent in August 2024 to 10.75 percent in February 2026.
This triggered on-site inspections of banks up to June 2025 by the CBK to review the movement of lending rates.
Banks faced fines of Sh20 million or three times the monetary gain made from ‘overcharging’ borrowers, with the regulator leaning on the punitive penalty.
The banks also risked additional daily penalties of up to Sh100,000 for every case or implication for each loan account, with the executives liable for a Sh1 million
The banking sector regulator hinged its actions on Section 55 of the CBK Act.
‘The (Monetary Policy) Committee observed that the CBR had been lowered substantially since August 2024, yet lending rates have only declined marginally,’ Dr Thugge said in February last year.