Kenya has a robust financial sector and its banks over the past two decades have expanded across East Africa.
Despite the expansion, Kenya has seen the capital adequacy ratios of some institutions come under pressure in recent years.
Addressing a news conference, Kamau Thugge, the governor of Kenya's central bank said "the capital requirements for banks need to be increased,” adding, “we have seen increased risks whether it is from climate change or cybersecurity."
Thugge did not mention the potential size of the increment.
The central bank was concerned about rising non-performing loans in the banking sector, which increased to 15.5% of total loans in February this year, from 14.8% at the end of last year, Thugge said.
The central bank governor said the proposal to raise the capital will be published in the next month for a public discussion. This will be in line with the legal requirements.
Kenya requires a minimum capital of 1 billion shillings ($7.69 million) for those who wish to start a bank.
Banks that are already operating are required to maintain 10.5% core capital to total risk-weighted assets, and 14.5% total capital to risk-weighted assets.
"We need strong banks," Thugge said.
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