Kenya plans to increase the capital requirements for commercial banks to account for emerging risks in areas like information communication technology and climate change, its central bank governor said on Thursday.
Although the East African nation has a robust financial sector, with its banks expanding around the region in the past two decades, it has seen the capital adequacy ratios of some institutions come under pressure in recent years.
"The capital requirements for banks need to be increased. We have seen increased risks whether it is from climate change or cybersecurity," Kamau Thugge, the central banker, told a news conference, without mentioning 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, he said.
Minimum capital
The proposal to raise the capital will be published in the next one month for a public discussion, Thugge said, 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.
➤Click here to follow our WhatsApp channel for more stories.
