STATE HOUSE,Nairobi -President William Ruto has today assented to the two bills, ushering in a wave of sweeping reforms designed to modernize the country’s financial systems, protect taxpayers, and align parliamentary retirement frameworks with the Constitution.
In signing the pieces of legislation, the Head of State noted that the updates are critical for the nation’s financial resilience and institutional integrity, stating that the new Central Bank of Kenya (Amendment) Act, 2026 is specifically “aimed at strengthening the CBK’s capacity to safeguard financial stability, improve banking oversight, and modernise the country’s monetary policy framework.”
At the heart of the newly signed banking law is a major operational overhaul that introduces a distinct legal framework separating the Central Bank’s routine monetary policy operations from Emergency Liquidity Assistance (ELA). This specific change aims to fortify the country’s economic safety nets, with the President explaining that “the move will improve Kenya’s preparedness to respond to financial crises while protecting taxpayers and the banking sector.”
Under this strict new regime, emergency liquidity support can no longer be used as a routine cushion; instead, “ELA can only be extended to banks that meet strict conditions on solvency, viability, and systemic risk.” This rigid barrier separates ordinary day-to-day liquidity management from extraordinary state interventions during rare periods of severe market distress.
The law also recalibrates the Central Bank’s institutional priorities, formally elevating financial system stability and sound banking regulation as secondary objectives of the CBK while preserving price stability as its apex mission. Through this mandate, the law officially recognizes the regulator’s core responsibility in protecting the overall integrity, resilience, and proper functioning of Kenya’s financial markets.
Governance at the bank is getting a parallel upgrade, as nominees for CBK Deputy Governor positions will now have to be vetted and approved by the National Assembly before taking office, a move that the President noted “aligns their process with that of the Governor and reinforces parliamentary oversight of senior leadership at the monetary authority.”
Beyond governance and stability, the CBK Act expands the regulator’s operational horizons. It grants formal statutory backing to the Central Bank of Kenya Institute of Monetary Studies, laying a clear legal path for training collaborations with national, regional, and international institutions to improve cross-border knowledge sharing.
Simultaneously, the President signed into law the Parliamentary Pensions (Amendment) Act, which updates decades-old retirement rules to align directly with Kenya’s constitutional reality. The new legislation overhauls the original Parliamentary Pensions Act of 1983, an artifact of government that became outdated the moment the 2010 Constitution established a bicameral legislature.
President Ruto highlighted that “the new law formally recognises both the National Assembly and the Senate in the administration of parliamentary pensions and ensures senators are entitled to benefits under the same framework as MPs.”
This legislative update introduces several progressive social and structural changes to the parliamentary pension scheme. Chief among the human rights realignments is redefining a “child” to mean a person below 18 years old rather than 16, directly matching the constitutional definition of a minor.
The Act structurally reconstitutes both the Parliamentary Pensions Management Committee and the Appeals Committee to guarantee balanced representation from both legislative houses, capturing the exact spirit of Kenya’s bicameral system.
To keep the legislative retirement program fiscally responsible and in harmony with broader public service pension policy, the amended law tightly caps exceptions, retaining lump-sum gratuity payments only for lawmakers who serve less than a full five-year term.
