Nairobi | Kampala | Kigali | Addis Ababa
Home » Insights » End of Higher Capital Requirements Waiver Period for Banking Institutions

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

Related Insights

Web Hosting
Domain Registration
Website Design