The Central Bank of Kenya (Amendment) Act, 2026 quietly rewrites the rules of emergency lending, regulatory power, and institutional governance. Here is what changed, why it matters, and what to watch next.
BACKGROUND
The Central Bank of Kenya (Amendment) Act, 2026 (the “Amended Act“) amends the Central Bank of Kenya Act, Cap. 491 (the “Principal Act“) across eight operative clauses. The Amended Act reshapes the Bank’s statutory mandate, introduces Kenya’s first purpose-built emergency liquidity framework, revises senior appointment procedures, expands precious-metals powers, renames the deposit insurer, and creates a new capacity-building function. Each amendment is addressed in turn below.
1. Twin-Track Mandate-Section 4(2)
Section 4(2) of the Principal Act previously articulated a single general object, fostering a stable, market-based financial system. The Amended Act bifurcates this into two express limbs; first, fostering the liquidity, solvency, proper functioning, and integrity of the financial system; and second, fostering the soundness, safety, and effective regulation of the banking system.
Prudential regulation is thereby elevated from an implied function to a named statutory object, providing explicit legal anchoring for supervisory interventions that previously rested on broader, implied powers. Regulated institutions and their counsel should re-examine the legal basis for CBK supervisory actions in light of this reformulated mandate.
2, Emergency Liquidity Assistance Framework-Section 36
The most consequential change is the wholesale rewrite of section 36. The former provision granted an undifferentiated facility allowing the Bank to lend to specified banks and microfinance banks for periods not exceeding six months, secured against treasury bills or government securities, with no eligibility screening beyond collateral.
That framework is abolished and replaced with a dual-track structure:
- Track 1: Routine Monetary Policy Lending: The Bank may grant loans and advances to implement monetary policy and maintain orderly market conditions on terms it determines. The six-month ceiling is removed.
- Track 2: Emergency Liquidity Assistance (“ELA”): ELA is available solely where the Bank determines it is necessary for the preservation of financial stability. Access is conditional upon the applicant institution satisfying the Bank’s solvency and viability criteria, not being subject to liquidation, and being assessed as systemically important or as posing a credible risk of systemic instability upon failure. ELA is expressly discretionary and temporary, capped at twelve months but extendable, and must be secured by collateral subject to valuation and risk-management requirements as the Bank prescribes.
Emergency support is no longer an open facility accessible on collateral alone. It is a structured, conditional, and discretionary instrument. Banks and microfinance institutions should monitor the regulations and directives the Bank will issue to operationalise the eligibility criteria and assess their current financial position against the anticipated thresholds well in advance of any crisis.
3. Deputy Governor Appointments-Section 13B
Section 13B(1) previously required Deputy Governors to be appointed by the President “with the approval of Parliament.” The Amended Act replaces “Parliament” with “the National Assembly,” aligning this procedure with section 13(1), which already specifies National Assembly approval for the Governor. Both senior offices now share a single, clearly identified approving chamber. Precedent documents for CBK senior appointments require consequential updating.
4. Expanded Precious Metals Powers-Section 27
Section 27(1) formerly authorised the Bank to buy, sell, import, export, hold, or deal in gold and foreign exchange, with rates subject to applicable international agreement benchmarks. The Amended Act expands the Bank’s permitted dealings to include transferring and refining, extends the asset class to gold coins and bullion, silver, platinum, and any other precious metals, and excises the proviso tying rates to international agreements entirely. The Bank’s rate-setting discretion in precious-metals transactions is henceforth unfettered. Counsel advising on precious-metals transactions with the Bank should update their transaction frameworks and rate-determination provisions accordingly.
5. Capacity-Building Mandate and Regulation-Making Power-Sections 4A and 57(3)
A new section 4A(1) empowers the Bank to provide capacity building and training to its own staff, the general public, government institutions, and persons from other jurisdictions, the first such enumerated statutory object in the Principal Act. Section 57(3) is correspondingly amended to extend the Bank’s regulation-making power to this new function, ensuring that subordinate legislation authority is coextensive with the expanded mandate.
6. Deposit Insurer Renaming-Section 46A
Section 46A, which authorises the Bank to lend to the deposit insurer for up to three years, secured against treasury bills or government securities, is re-enacted in substantively identical terms. The sole amendment substitutes the defunct “Deposit Protection Fund Board” with “Kenya Deposit Insurance Corporation” throughout, reflecting the reconstitution of that body under the Kenya Deposit Insurance Act. Transaction documents and precedents referencing the deposit insurer by its former name require consequential correction.
IMMEDIATE ACTION POINTS THE FINANCIAL AND STAKEHOLDER
| Action Item | Who Should Act | Statutory Basis |
|---|---|---|
| Monitor CBK regulations and directives on solvency, viability, and systemic-importance criteria under the new ELA framework; assess institutional eligibility proactively. | Banks; microfinance institutions; in-house counsel | Amended s. 36 |
| Update precious-metals transaction frameworks and rate clauses, the Bank’s rates are no longer anchored to international agreement benchmarks. | Counsel advising on gold, bullion, or precious-metals dealings with the Bank | Amended s. 27 |
| Update precedent documents: Deputy Governor appointments require National Assembly approval; all references to the Deposit Protection Fund Board should read Kenya Deposit Insurance Corporation. | Transactional and regulatory counsel | Amended ss. 13B, 46A |
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