At least 24 banks face possible closure if the proposed increase in core capital from Ksh.1 billion to Ksh.10 billion is implemented in three years. This could affect nearly 7,000 employees and disrupt the banking sector.
During a session with the National Assembly’s Finance Committee, the Kenya Bankers Association (KBA) raised concerns.
They argued that the change would severely impact the economy. Moreover, they warned that raising taxes on financial transactions would increase loan interest rates.
Additionally, the bankers noted that the core capital hike would limit access to credit, slow economic growth, and result in job losses.
It could also reduce government revenue from taxes. According to KBA, 24 banks would need Ksh.150 billion to meet the new requirements.
Acting KBA CEO Raymond Molenje emphasized the banks’ role in economic growth, employment, and governance.
He further noted that the proposal could force the closure of 627 rental premises and directly impact 6,779 employees.
More disruption
Furthermore, Molenje highlighted that the abrupt change would harm financial inclusion, disrupt deposits, and limit loan availability.
However, critics argue that banks already cut credit to MSMEs and SMEs, favoring government securities for higher returns.
Other stakeholders, including Westminster and LexLinks Consultancy, also participated in the public hearings on the Tax Amendment Laws.
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