24 Banks Face Collapse, Thousands of Jobs at Risk Over New Capital Requirements
At least 24 banks in Kenya could face closure, putting nearly 7,000 jobs in jeopardy, if the proposed increase in core capital from Ksh. 1 billion to Ksh. 10 billion is implemented within three years.
The warning came during a session where the Kenya Bankers Association (KBA) presented submissions to the National Assembly’s Finance Committee regarding the potential impact of the new law. The proposed changes, which include raising core capital requirements, have raised concerns among financial institutions, particularly over their ability to access credit and the effect on employment levels.
Raymond Molenje, the Acting CEO of KBA, cautioned that such a drastic increase could destabilize the banking sector, limit credit access, and lead to significant job losses. “The 24 banks contribute substantially to economic growth, employment creation, and government revenue,” Molenje said.
The law could directly impact 6,779 employees, with an additional 627 rental premises at risk of closure. Banks would need Ksh. 150 billion to meet the new capital threshold, a burden that could hinder their ability to extend loans, particularly to small and medium-sized enterprises (SMEs).
Furthermore, KBA warned that these changes would result in higher interest rates for loans, as financial institutions may need to compensate for the increased costs through higher charges. The move could stall economic growth, reduce financial inclusion, and distort the credit market.
As the government moves forward with discussions, the banking sector remains wary of the far-reaching effects of these proposed changes on both the economy and livelihoods.
24 Banks Face Collapse, Thousands of Jobs at Risk Over New Capital Requirements
