The Kenya Bankers Association (KBA) has announced that it is implementing Ksh2 million ($15,000) maximum withdrawal limit under the Anti-Money Laundering Act.
Appearing before the Departmental Committee on Finance and National Planning on Tuesday, March 25, KBA assured lawmakers that banks in the country were fully compliant.
Further, KBA representatives, led by the CEO Raimond Molenje, added that enhanced due diligence measures were also in place, especially for new customers.
He explained that the measures have been taken to prevent illicit financial transactions.
At the same time, the association appealed to the committee to address issues of pending government bills, emphasizing the impact on entrepreneurs’ loan servicing and overall bank liquidity.
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KBA Addresses Implementation of the CBR
On the other hand, the association reported a 2.2% reduction in commercial bank interest rates between November 2024 and March 2025, in response to the Central Bank Rate (CBR) adjustments.
However, the committee members questioned why banks are quick to increase interest rates when the CBR rises but slow to lower them when the CBR drops.
In response, KBA committed to improving communication with the Central Bank of Kenya (CBK) following Monetary Policy Committee (MPC) announcements to ensure a fairer and more transparent rate adjustment process for customers.
Similarly, Central Bank of Kenya (CBK) Governor Kamau Thugge addressed the concerns explaining that the measures were taken to inject liquidity into the banking sector.
He noted that lower CBR led to lower costs of funds and lending rates. The CBK governor however noted that some commercial banks had not yet fully adjusted their lending rates.
He also noted the recent amendments to the Banking Act which impose penalties on banks that fail to do so.
“Mr. Chairman, we have asked these banks to submit board-approved capital buildup plans detailing specific measures, timelines, and milestones to achieve compliance,” he explained.
Also Read: Govt Clarifies Cash Shortage in Banks
Absa Bank Kenya Hints at Further CBR Reduction
Absa Bank Kenya on March 10, projected that the Central Bank Rate (CBR) would be reducing to 9% by the third quarter of 2025.
Additionally, insights shared at the 2025 Macro Economic Outlook, Risk Management, and Structured Investment Solutions Forum, detailed that the rate would then remain unchanged for the rest of the year.
Further, Absa Bank Senior Economist Phumelele Mbiyo stated that with the expected 9% policy rate, Kenya’s economy would experinece improved access to credit.
“The Central Bank of Kenya is expected to cut the Central Bank Rate down to 9 percent by the third quarter of the year and leave it unchanged for the remainder of this year.
“This is expected to lower the cost of borrowing and boost private sector credit expenditure,” stated Absa Bank Kenya.
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