CBK Defends Revenue-Based Bank Fee Proposal Before Lawmakers

A parliamentary committee has raised legal and consumer protection concerns over the Central Bank of Kenya's (CBK) proposed overhaul of bank licensing fees, questioning whether the new framework has a sufficient legal foundation and if it could ultimately raise the cost of banking services.

• The National Assembly's Committee on Delegated Legislation pressed the Central Bank Governor Dr Kamau Thugge over the Banking (Fees) Regulations, 2026, gazetted in May this year, which is set to replace a fee structure that had remained largely unchanged for more than three decades with annual charges linked to banks' revenues.
• The regulations phase in annual fees based on a percentage of an institution's gross annual revenue, rising from 0.13% this year to 0.15% from 2028 onward, replacing the previous system under which banks paid fixed annual fees determined by the size of their branch network. 
• In a March 2025 consultative paper, CBK had sought a levy of 1% of gross annual revenue, phased in starting at 0.6% and rising to 0.8% and then 1% over three years, projected to raise annual revenue from KSh 4.5 billion to KSh 7.5 billion. 

CBK also evaluated deposit-based and asset-based fee models before settling on gross annual revenue, citing internal analysis showing those alternatives would have cut sector profitability far more sharply and pushed several smaller lenders into loss-making territory. 

However, the parliamentary committee’s Vice-Chairperson Robert Githinji questioned whether the Banking Act provides a legal basis for creating a category of "banking fees," arguing that the regulations could face constitutional or judicial scrutiny because the enabling law does not expressly support the new terminology.

Lawmakers also sought clarification on how gross annual revenue would be calculated, expressing concern that the definition could be interpreted broadly enough to capture customer deposits and inflate the fees payable by lenders. Kathiani MP Robert Mbui pressed the governor on whether deposits would be included in the calculation.

Dr Thugge told the committee that the levy would be based on audited revenue streams including interest income from loans and government securities, fees and commissions, foreign exchange trading income, dividends and other operating income.

The New Model

Dr Thugge told the committee the revised fee structure would provide the central bank with additional resources to strengthen supervision as banks confront increasingly complex risks, including cybersecurity threats, artificial intelligence and anti-money laundering compliance.