𝐃𝐄𝐋𝐄𝐆𝐀𝐓𝐄𝐃 𝐋𝐄𝐆𝐈𝐒𝐋𝐀𝐓𝐈𝐎𝐍 𝐂𝐎𝐌𝐌𝐈𝐓𝐓𝐄𝐄 𝐑𝐀𝐈𝐒𝐄𝐒 𝐋𝐄𝐆𝐀𝐋, 𝐂𝐎𝐍𝐒𝐔𝐌𝐄𝐑 𝐂𝐎𝐍𝐂𝐄𝐑𝐍𝐒 𝐎𝐕𝐄𝐑 𝐂𝐁𝐊'𝐒 𝐏𝐑𝐎𝐏𝐎𝐒𝐄𝐃 𝐁𝐀𝐍𝐊𝐈𝐍𝐆 𝐅𝐄𝐄𝐒

Members of the National Assembly's Committee on Delegated Legislation have raised legal and constitutional concerns over the Central Bank of Kenya's proposed Banking Fees Regulations, 2026, warning that the new fee regime could increase the cost of banking services and expose the regulations to court challenges.

Central Bank Governor Dr. Kamau Thugge defended the proposed regulations when he appeared before the National Assembly's Delegated Legislation Committee, saying they are intended to modernise a fee structure that has remained unchanged since 1994 despite the banking sector's rapid growth.

The proposed regulations would replace the current flat annual fee, determined by the number of bank branches, with a levy equivalent to 0.15 per cent of a bank's gross annual revenue.

Committee Vice-Chairperson Hon. Robert Githinji (Gichugu) questioned the proposal's legal basis, arguing that the term "banking fees" does not appear in the Banking Act.

"You need to create a term called 'banking fees' because Section Five of the Act does not contain that term. Without it, the regulations could be vulnerable to legal challenge," Hon. Githinji said.

The committee also sought clarification on what constitutes gross annual revenue. Hon. Robert Mbui (Kathiani) questioned whether customer deposits would be included in the calculation, expressing concern that the definition was too broad.

Dr. Thugge told the committee that customer deposits are liabilities rather than revenue and that the levy would instead be based on audited interest income generated from loans and investments in government securities.

Lawmakers also challenged provisions requiring newly licensed banks to pay fees based on projected revenues, arguing that the regulations provide no clear legal framework for rejecting unrealistic projections submitted by applicants.

Dr. Thugge defended the proposal, saying new banks cannot begin operations before paying until they pay the fee and, in the absence of historical financial records, projected revenues remain the only practical basis for determining the initial payment.

The committee also criticised Regulation 5, which proposes a 100 per cent penalty for institutions that fail to pay the annual fee by December 31.

"You are being asked to pay double the amount and still face the risk of losing your licence. That amounts to double jeopardy," Hon. Mbui said, adding that the deadline falls during the festive season when many institutions operate with reduced staffing.

Dr. Thugge maintained that the additional revenue would strengthen the Central Bank's supervisory capacity in areas such as cybersecurity, artificial intelligence and anti-money laundering, noting that stronger oversight is necessary as Kenya works towards exiting the international financial monitoring grey list.

The committee said it would scrutinise the regulations further before tabling its report in the House, and indicated that it may also seek views from banking industry stakeholders and consumers before making its recommendations.