The Microfinance Bill 2026 has won broad backing from the Kenya Bankers Association (KBA), alongside the Competition (Amendment) Bill, 2026 but the association is urging Parliament to build in safeguards against duplicate regulation, steep penalties and disruption to financial inclusion.
In memoranda filed with the National Assembly’s Departmental Committee on Finance and National Planning, KBA laid out its position on the Competition (Amendment) Bill, 2026, and the Microfinance Bill, 2026.
Competition Bill: Concerns Over “Dominance” Test and Fine Levels
KBA supports the goal of a stronger, fairer competition regime, but warned that some provisions in the Competition Bill risk creating legal ambiguity for institutions already under heavy sector-specific oversight.
On Clause 3’s proposed expansion of dominance tests “strategic market position” and “superior bargaining position” KBA argued that popular or widely adopted digital financial products should not automatically be read as dominance. Products like mobile savings, digital credit and wallet-linked banking often scale simply because they work well for customers, the association said, and that scale alone shouldn’t trigger a dominance finding.
KBA wants the Competition Authority of Kenya (CAK) required to prove sustained, substantial market influence before designating any firm as holding a strategic market position. It is also seeking explicit carve-outs for conduct driven by mandatory compliance rules AML/CFT, data protection, cybersecurity and prudential requirements.
On penalties, KBA objects to the proposed fine cap of 10% of an entity’s gross annual turnover, calling it overly punitive and disconnected from actual consumer harm or the scale of a given breach. It has proposed capping fines instead at 1% of turnover tied to the affected service, or Kshs 100 million whichever is lower.
The association also wants statutory coordination built in between the Competition Authority of Kenya and financial regulators CBK, CMA, IRA and SASRA to avoid parallel investigations and conflicting directives.
Microfinance Bill 2026: Pushback on Capital Hike and Collateral Ban
KBA welcomed the push to modernize microfinance regulation and strengthen Central Bank of Kenya oversight, but raised two specific objections to the Microfinance Bill 2026.
Capital requirements: Clause 13(1) of the Microfinance Bill 2026 would raise minimum core capital for microfinance institutions from Kshs 60 million to Kshs 250 million. KBA wants that threshold held at Kshs 60 million, or raised gradually to a range of Kshs 100–150 million instead, warning that a jump straight to Kshs 250 million could trigger exits, forced consolidation and reduced access for MSMEs and underserved borrowers.
Cash collateral: Clause 58(1) would bar non-deposit-taking MFIs from holding cash collateral altogether. KBA called loan-linked cash collateral an essential risk tool in group lending to low-income borrowers, women, youth and rural micro-enterprises, and proposed allowing it under conditions segregated, fully disclosed, non-interest-bearing, and refunded once the loan is settled.
What’s Next
KBA says it remains committed to a legislative framework that balances consumer protection and financial stability with innovation and growth.
Committee Chairperson Hon. Kuria Kimani acknowledged that KBA had raised substantive issues on the Microfinance Bill 2026 and said the Committee would weigh the submissions when members retreat to draft their report.
