A fresh report by the Central Bank of Kenya (CBK) has unveiled a worrying trend of regulatory breaches within the country’s banking sector.

A total of twelve commercial banks were found to be in contravention of supervisory and regulatory guidelines as of the end of last year.

The CBK’s annual report for 2023 pinpoints the specific areas of non-compliance as breaches of the single obligor limit, insider lending restrictions, prohibited business investments, and capital adequacy shortfalls.

Further, a number of institutions overstepped foreign exchange exposure limits, failed to maintain requisite liquidity ratios, and exhibited shortcomings in corporate governance.

While the report does not explicitly name the errant banks, it does offer a glimmer of optimism by noting a slight improvement from the previous year’s tally of thirteen transgressors.

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However, the CBK underscores the seriousness of the situation, attributing the majority of violations to the dual pressures of Kenya Shilling’s depreciation against the US Dollar and dwindling core capital in loss-making banks.

“Most of the violations were with respect to breach of single obligor limit due to depreciation of the Kenya Shillings against the US Dollar and decline in core capital in some banks that have continued to report losses,” reads the report in part.

The regulator has asserted that corrective measures have been implemented to rectify the situation and safeguard the interests of depositors.

It emphasises the crucial role of these actions in preserving the stability and integrity of Kenya’s banking landscape, a cornerstone of the country’s financial resilience.