End of Higher Capital Requirements Waiver Period for Banking Institutions
Banking institutions in Kenya are expected to have complied with full capital requirements introduced through the International Financial Reporting Standards 9 (IFRS 9) by the end of the next quarter which ends the waiver on compliance with higher capital requirements. Under this standard, the institutions are required to make a provision for anticipated loan losses thereby raising the Capital Adequacy Requirements (CAR). With the lapse of the five-year waiver, the financial institutions will be required to comply with the following ratios.
| 10.5 percent for core capital to total risk-weighted assets ratio; |
| 14.5 percent for total capital to total risk-weighted assets; and |
| 8 percent for the core capital to total deposits ratio. |
The failure to comply with the CAR may lead to the imposition of a general fine under the Banking Act which shall not exceed one hundred thousand shillings. The officers of the banking institution will also be liable to a fine not exceeding fifty thousand shillings or to imprisonment for a term not exceeding two years or to both. The Central Bank of Kenya may also revoke the license granted to a financial institution that fails to meet the minimum ratios as highlighted
