The Kenya Bankers Association (KBA) is seeking changes to the Banking Act that would give the Central Bank of Kenya (CBK) a greater role in regulating increases in commercial bank loan rates.
The proposed changes target Section 44 of the Banking Act, which currently requires Treasury approval before banks can increase loan interest rates. KBA wants the statutory authority shifted from the National Treasury to the CBK as part of wider reforms to credit pricing.
KBA Chief Executive Raymond Molenje said banks are already engaging with CBK on a broader review of the framework. The association also wants the revised risk-based credit pricing model incorporated into the law.
The push comes as the legal dispute over banks’ ability to raise lending rates remains before the courts. The Supreme Court ruled in June 2024 that banks must obtain approval from the Treasury Cabinet Secretary before increasing loan interest rates.
However, the matter has continued through subsequent court proceedings. On March 14, 2025, the Supreme Court rejected Stanbic Bank’s request to revisit the earlier ruling.
The High Court later rejected KBA’s constitutional challenge to the requirement in December 2025. However, on August 13, 2026, the court stayed Section 44 only to the extent that it requires Treasury approval for increases in loan interest rates, pending further orders in KBA’s appeal at the Court of Appeal.
KBA is now seeking a legislative solution while the court process continues. “Banks are discussing a broader review with CBK,” Molenje said, according to the report.
The proposed reforms could also introduce a sector tribunal to handle disputes within the banking industry. However, the details of the proposed tribunal have not been provided.
Meanwhile, CBK’s revised risk-based credit pricing model was fully implemented in March 2026. The model uses the Kenya Shilling Overnight Index Average (KESONIA) as the common reference rate, while the Central Bank Rate (CBR) serves as an alternative.
The developments place loan pricing at the centre of ongoing changes in Kenya’s banking sector. While banks are seeking greater regulatory clarity, the legal dispute over who approves increases in lending rates remains unresolved.