New Law Gives CBK Powers to Rescue Systemically Important Banks During Financial Crises

Kenya has enacted a new law strengthening the Central Bank of Kenya’s crisis response powers. The legislation allows the regulator to provide emergency funding to qualifying banks facing liquidity challenges in order to safeguard financial stability.

President William Ruto has signed the Central Bank of Kenya (Amendment) Act, 2026, establishing a formal legal framework for the CBK to extend emergency liquidity assistance during banking crises. However, the support will only be available to solvent and viable institutions that are not under liquidation and whose failure could threaten the broader financial system.

Under the new law, emergency assistance will be temporary, discretionary and subject to conditions set by the CBK. Banks receiving the support will be required to provide acceptable collateral that meets the regulator’s valuation, margin and risk management requirements, while loans will generally be repayable within 12 months unless an extension is approved.

The legislation also broadens the CBK’s statutory mandate by requiring it to promote the liquidity, solvency, integrity and proper functioning of Kenya’s financial system alongside its oversight of banks.
In addition, the Act expands the range of reserve assets the CBK may hold and trade to include gold coins, bullion, silver, platinum and other precious metals. It also authorises training and capacity-building programmes for staff, public institutions, members of the public and foreign institutions.

The amendments further align the law with the 2010 Constitution by replacing references to Parliament with the National Assembly in the approval process for deputy governors. The reforms build on previous measures that expanded the CBK’s oversight to digital lenders in 2021 and non-deposit-taking credit providers in 2026.