Banks will now have to meet tougher financial and operational thresholds before accessing Emergency Liquidity Assistance (ELA) from the Central Bank of Kenya under a new law.

🇰🇪 Breaking It Down

President William Ruto on Monday, July 6, assented to the Central Bank of Kenya (Amendment) Act, 2026, introducing sweeping reforms aimed at strengthening banking oversight, enhancing financial stability, and overhauling the country's framework for emergency support to banks.

In a statement seen by this publication, the President said the framework is designed to strengthen financial stability while ensuring taxpayer protection during periods of banking distress.

“The move will improve Kenya’s preparedness to respond to financial crises while protecting taxpayers and the banking sector,” he wrote.

📌 What You Need to Know

The new law requires banks to meet strict conditions on solvency, viability and systemic risk before receiving emergency support.

This signals efforts to strengthen discipline in the banking sector by reducing expectations of automatic support and encouraging stronger risk management and liquidity planning by banks.

Regulators are now required to exercise greater scrutiny of a bank’s needs and operations before determining that ELA is the appropriate response.

Institutions that do not meet these conditions are more likely to be subjected to other mitigation processes, such as restructuring, resolution or closure, rather than receiving emergency funding.

Additionally, the law formally separates the CBK’s routine monetary policy operations from emergency financial interventions.

It creates a clearer distinction between day-to-day liquidity management and crisis response measures, with more targeted actions by CBK expected during periods of financial stress.

📰 Source: Kenyans.co.ke