Regulatory Alerts2025-04-08
Banking Circular No. 2 of 2025 - Changes to the CBK Discount (Overnight) Window Facility
The Central Bank of Kenya (CBK) has announced changes to the CBK Discount (Overnight) Window Facility. The Monetary Policy Committee (MPC) reviewed and approved these changes on April 8, 2025, aiming to enhance monetary policy transmission and augment reforms announced earlier. Key changes include adjustments to the applicable interest rate and the continuation of securing advances with Government of Kenya securities, while existing terms for the Intra-day Liquidity Facility (ILF) remain unchanged. This circular supersedes all previous circulars on the subject matter and takes effect immediately, as communicated to all Chief Executives of Commercial Banks and Microfinance Banks.
April 8, 2025
BANKI KUU YA KENYA CENTRAL BANK OF KENYA Haile Selassie Avenue P.O. Box 60000 - 00200 Nairobi, Kenya Telephone: 2860000, Fax: 3340192
Banking Circular No. 2 of 2025
TO: ALL CHIEF EXECUTIVES OF COMMERCIAL BANKS AND MICROFINANCE BANKS
CHANGES TO THE CBK DISCOUNT (OVERNIGHT) WINDOW FACILITY
The Monetary Policy Committee (MPC) of the Central Bank of Kenya (CBK) at its meeting held on April 8, 2025, reviewed and approved changes to the CBK Discount (Overnight) Window Facility. The Monetary Policy Committee (MPC) of the Central Bank of Kenya (CBK) held a meeting on April 8, 2025, and reviewed and approved changes to the CBK Discount (Overnight) Window Facility. These changes are designed to enhance monetary policy transmission and augment reforms announced on August 9, 2023, on the Monetary Policy Implementation Framework. These changes are designed to enhance monetary policy transmission and augment reforms announced on August 9, 2023, on the Monetary Policy Implementation Framework.
The CBK therefore makes the following changes.
- The applicable interest rate on the facility has been reviewed from 300 basis points above the CBR to 75 basis points above the CBR. The applicable interest rate on the facility has been reviewed from 300 basis points above the CBR to 75 basis points above the CBR.
- The advances will continue to be secured by Government of Kenya securities subject to haircut as outlined in Banking Circular No 6 of 2023 dated August 29, 2023. The advances will continue to be secured by Government of Kenya securities subject to haircut as outlined in Banking Circular No 6 of 2023 dated August 29, 2023.
- The existing terms for access to the Intra-day Liquidity Facility (ILF) remain unchanged. The existing terms for access to the Intra-day Liquidity Facility (ILF) remain unchanged.
This Circular supersedes all previous circulars issued on the above subject matter and the changes take effect immediately.
MICHAEL EGANZA DIRECTOR, BANKING AND PAYMENT SERVICES DEPARTMENT
cc: Chief Executive Officer - Kenya Bankers Association
C2: CBK - Official