The Central Bank of Kenya (CBK) has overhauled the bank licence fee structure for the first time in 33 years, replacing the long-standing branch-based charging system with a new model l tied to financial institutions’ gross annual revenue.
The new regulations, introduced through the Banking (Fees) Regulations, 2026 (Legal Notice No. 81 of 2026), will introduce a new system for how banks and other institutions licensed under the Banking Act pay their annual regulatory fees.
CBK has scrapped the previous framework introduced in 1994, which required banks to pay fees based largely on the number and location of their branches.
Under the new system, banks will shift to a Gross Annual Revenue (GAR) model, where licence fees will be calculated based on an institution’s total gross annual revenue.
The revenue will be determined using audited financial statements from the previous financial year, including income from interest, fees, commissions, and trading activities.
Gross annual revenue includes income from interest on loans, advances, government securities and placements, fees and commissions on loans and advances, dividend income, foreign exchange trading income, and any other income disclosed in audited financial statements.
Currently, licensing fees are based on a branch-based method, where banks pay fees depending on the number of branches they operate.
CBK Introduces New Revenue-Based Licence Fee Model for Banks
Under the new framework, banks and other licensed institutions will pay annual licence fees calculated as a percentage of their gross annual revenue.
According to the apex bank, the new licence fees will be rolled out gradually over a four-year transition period, with banks paying a lower rate in the initial years before the full rate takes effect.
Under the new structure, institutions will pay 0.13 percent of their gross annual revenue in 2026, rising to 0.14 percent in 2027. The rate will increase to 0.15 percent from 2028 onwards.
The revenue figure used to calculate the fees will be drawn from the institution’s audited and published financial statements for the financial year preceding the final year.
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End of the Branch-Based Fee System
The new model replaces the Banking (Fees) Regulations, 1994, which required banks to pay licence fees based on their physical branch networks.
Under the previous framework, banks paid licence fees based on the size and location of their branch networks.
A bank paid KSh400,000 when it was granted a licence and on every anniversary thereafter.
Each branch within a municipality paid an annual fee of KSh150,000, while branches in town council areas paid KSh100,000 and those in urban council areas paid KSh30,000 annually.
The branch-based system meant banks with wider physical networks incurred higher regulatory costs, regardless of their revenue levels or profitability.
Also Read: Why Banks Charge What They Do and How to Get Cheaper Credit – Advice by a Banking Economist
New Banks to Pay Fees Based on Projected Revenue
The regulations also provide a formula for newly licensed institutions that have not started operations.
Such institutions will pay annual licence fees based on their average projected gross annual revenue for the first three years after receiving their licence.
The provision allows new market entrants to meet regulatory obligations before developing a full operational track record.
Banks Required to Pay Fees in Full
The regulations require all licensed institutions to remit their annual licence fees to CBK as a lump sum payment.
Institutions that fail to pay within the required period will face penalties.
A bank or financial institution that defaults on payment will be required to pay double the annual fee within 90 days after the deadline.
Failure to comply could also expose the institution to regulatory action, including possible licence revocation under the Banking Act.
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