Kenya’s Banking (Fees) Regulations 2026: New Annual Fees for Banks

The Central Bank of Kenya has replaced the fee structure that banks, financial institutions and mortgage finance companies have paid since 1994. The Banking (Fees) Regulations, 2026 move away from a flat regulatory fee and introduce annual fees calculated as a percentage of an institution’s gross annual revenue, rising in stages over three years. For licensed institutions, this changes both how the annual fee is calculated and what happens if it is paid late. This article covers what the new Regulations require.

The New Law: The Banking (Fees) Regulations, 2026

The Banking (Fees) Regulations, 2026 (Legal Notice 81 of 2026) were published in the Kenya Gazette and commenced on 8 May 2026. They are made under the Banking Act and apply to institutions licensed under section 4 of the Act, meaning banks, financial institutions and mortgage finance companies regulated by the Central Bank. Regulation 6 revokes the Banking (Fees) Regulations, 1994, which the new Regulations replace in full.

The Licence Application Fee

Regulation 2 sets the fee payable to the Central Bank by an institution applying for a licence under section 4 of the Banking Act at five thousand shillings. This is a modest, one-off fee payable at the application stage, separate from the annual fees that apply once a licence is granted and business begins.

A New Annual Fee Tied to Gross Revenue

The significant change is in regulation 3, which sets the annual fee payable under section 5(4) of the Banking Act as a percentage of an institution’s gross annual revenue, rather than a fixed amount. The Schedule sets out the applicable rate and compliance date for each year: 0.13 per cent for the 2026 financial year, payable by 31 December 2026; 0.14 per cent for 2027, payable by 31 December 2027; and 0.15 per cent for 2028 and every year from 2029 onwards, payable by 31 December of the relevant year. The rate therefore rises over the first three years before settling at 0.15 per cent on a permanent basis.

Regulation 3(3) defines gross annual revenue broadly. It includes income from interest on loans, advances, government securities and placements, income from fees and commissions on loans and advances, dividend income, foreign exchange trading income, and any other income, calculated from the institution’s audited and published financial statements for the year immediately preceding the financial year in question. Institutions should note that the fee is therefore based on a lagging figure, drawn from the prior year’s published accounts, rather than projected current-year performance.

New Institutions: Fees Before Business Commences

Regulation 3(2) addresses institutions that have just been granted a licence but have not yet commenced banking business, financial business, or mortgage finance business in Kenya. Such an institution must pay the annual fee based on the average projected gross annual revenue for the three years immediately following the grant of its licence, rather than on historical audited figures, since none yet exist. This is a practical point for any institution entering the Kenyan market: the fee calculation for the pre-launch period depends on the institution’s own revenue projections, which should be prepared carefully given they form the basis of a regulatory payment obligation.

Payment, Late Payment and Revocation Risk

Regulation 4 requires fees to be remitted to the Central Bank as a lump sum. Regulation 5 sets out the consequences of missing the compliance date: an institution that fails to pay its annual fee by the due date becomes liable to pay double the annual fee, and must do so within ninety days after the original due date. If the institution also fails to make that doubled payment within the ninety-day window, it becomes liable to have its licence revoked under the procedure in section 6 of the Banking Act. Given that licence revocation is the ultimate sanction available to the Central Bank, institutions should treat the annual fee compliance date as a hard deadline rather than an administrative formality.

Why This Matters for Licensed Institutions

For most institutions, the shift from a fixed fee to a percentage of gross annual revenue will materially change the size of the annual payment, and larger institutions with higher gross revenue will see a correspondingly larger fee under the new structure. Finance teams at banks, financial institutions and mortgage finance companies should build the new percentage-based calculation, and the escalating rate through 2028, into their regulatory cost forecasting. Institutions should also confirm internally which figures in their audited financial statements feed into the gross annual revenue definition, since the Regulations list specific income categories rather than adopting a single line from the financial statements wholesale. Institutions that rely on external auditors to prepare their annual statements should factor the annual fee compliance date into their audit timetable, so the relevant figures are available well ahead of the 31 December deadline each year.