The Central Bank of Kenya (CBK) has revealed that 11 commercial banks violated the Banking Act and CBK Prudential Guidelines as of December last year, exposing them to the risk of over-concentrating their lending to single clients.
According to the CBK's 2024 Banking Sector Supervision Annual Report, most of the breaches related to the single obligor (maximum amount a bank is allowed to lend to one borrower) limit occurred due to a decline in core capital in some banks that reported losses during the year.
The report indicates that nine commercial banks breached Section 10 (1) of the Banking Act by exceeding the single obligor limit of 25 per cent of core capital.
This restriction is meant to prevent overexposure to a single borrower, which can threaten a bank's stability.
