The Central Bank of Kenya (CBK) has sanctioned 33 commercial banks for failing to comply with rules designed to make loan pricing fairer and more affordable for borrowers. According to the CBK's 2025 Bank Supervision Annual Report, the regulator carried out targeted inspections to assess how banks had implemented the Risk-Based Credit Pricing Model (RBCPM), a framework introduced in 2019. The RBCPM aims to ensure that interest rates charged to borrowers reflect their individual credit profiles rather than a blanket rate.
The findings, disclosed in the 2025 Bank Supervision Annual Report, showed that 33 banks had attracted financial penalties for non-compliance as of December 31, 2025. In addition to these penalties, CBK took administrative action against 2 further banks. Only three banks were found to be fully compliant with the RBCPM. The report serves as the regulator's formal account of the health and conduct of Kenya's banking sector over the course of the year.
The RBCPM was designed to push lenders away from uniform pricing and towards a model where customers with stronger credit histories are rewarded with lower borrowing costs. Its rollout in 2019 aimed to improve access to credit and bring greater transparency to the lending market. The CBK's decision to levy penalties signals a firmer enforcement stance after a prolonged period of inadequate implementation by the majority of lenders.
The 2025 Bank Supervision Annual Report listed the top 10 banks by gross lending in 2025, led by KCB Bank Kenya after its loan book surpassed KSh 1 trillion. KCB held nearly a quarter of the banking sector’s gross loans. The report also examined loan growth, non-performing loans, customer deposits, and the sectors driving demand for credit.
Trade, real estate, manufacturing, and personal and household borrowing accounted for most non-performing loans. Despite these risks, banks recorded strong capital, liquidity, and profitability levels during the year. The report provides a comprehensive overview of the banking sector's performance and highlights areas for improvement.
The CBK's actions demonstrate its commitment to ensuring that banks comply with regulatory requirements and prioritize fair lending practices. The penalties and administrative actions taken against non-compliant banks aim to promote a more transparent and equitable lending environment. The CBK's efforts are expected to have a positive impact on borrowers and the overall economy.
The banking sector's compliance with the RBCPM will continue to be monitored, and banks that fail to comply may face further penalties. The CBK's 2025 Bank Supervision Annual Report provides valuable insights into the banking sector's performance and highlights the need for continued vigilance in ensuring fair lending practices.
Key points
- The Central Bank of Kenya penalized 33 commercial banks for non-compliance with its Risk-Based Credit Pricing Model.
- The RBCPM aims to ensure that interest rates charged to borrowers reflect their individual credit profiles rather than a blanket rate.
- Only three banks were found to be fully compliant with the RBCPM as of December 31, 2025.
