The Central Bank of Kenya (CBK) has invited Kenyans to submit their views on the Draft Central Bank of Kenya (Credit Guarantee Business) Regulations, 2025, a new framework aimed at strengthening Kenya’s financial system.
The proposed regulations seek to provide a clear legal and regulatory framework for credit guarantee businesses in Kenya. Credit guarantees are financial tools that help borrowers, especially small businesses and individuals, access loans by reducing the risk lenders face. Under such arrangements, a guarantor pledges to cover part or all of the borrower’s loan in case of default.
The draft framework stipulates that all entities involved in providing credit guarantees must either register with or obtain a license from the Central Bank of Kenya (CBK). The move is aimed at creating a transparent and accountable environment, given the growing role of credit guarantees in easing access to finance for individuals and small businesses.
Under the proposed structure, registered providers will be obligated to meet a set of minimum operational standards, including proper record-keeping, risk management systems and customer redress mechanisms. This is expected to improve efficiency and safeguard consumers from potential malpractices.
On the other hand, licensed providers will face stricter regulatory requirements, covering areas such as capital adequacy, governance, and periodic reporting to the CBK. By holding licensed entities to higher standards, regulators aim to ensure that only financially sound and well-managed institutions can offer large-scale or high-risk guarantee services.
In line with Kenya’s constitutional requirements on public participation, CBK is asking stakeholders, including financial institutions, businesses, civil society and members of the public to share feedback on the draft regulations. This step will ensure the rules are practical, inclusive and beneficial to the economy.
The draft document is available on the CBK website and has also provided an online platform for the submission of feedback.
According to CBK, the move is aimed at ensuring all credit guarantee providers operate under legal and regulatory parameters.
“CBK notes that entities providing credit guarantee business play a pivotal role in ensuring that critical economic sectors in Kenya, such as the Micro, Small and Medium Enterprises (MSMEs), continue to access affordable credit sustainably,” CBK noted.
Members of the public have until Wednesday, October 15, 2025, to send in their views. After this period, CBK will review all feedback and incorporate it before finalising the regulations.
If implemented, the regulations could have far-reaching implications for microfinance institutions, fintech companies and other players offering credit guarantees. For many small businesses, credit guarantees are often the bridge to accessing loans from banks. The strengthened framework is therefore expected to promote financial inclusion while safeguarding stability in Kenya’s financial system.
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