Ruto signs CBK Reform Law, Parliamentary Pension Bill

President William Ruto on Monday signed into law the Central Bank of Kenya (Amendment) Bill, 2026, reforms aimed at strengthening the Central Bank of Kenya's ability to safeguard financial stability, improve banking oversight and modernise the country's monetary policy framework.

Ruto also assented to the Parliamentary Pensions (Amendment) Bill, 2023, which aligns the parliamentary pension framework with the Constitution and extends pension benefits to members of both the National Assembly and the Senate.

The Central Bank of Kenya (Amendment) Act introduces a new legal framework separating the CBK's routine monetary policy operations from Emergency Liquidity Assistance (ELA), a mechanism through which the Central Bank can support financial institutions facing temporary liquidity challenges during periods of financial distress.

The reforms are intended to ensure emergency interventions are only undertaken under clearly defined conditions while shielding taxpayers from unnecessary financial risks.

Under the new law, ELA will only be available to banks that meet strict requirements on solvency, long-term viability and systemic importance.

The legislation distinguishes ordinary liquidity management from extraordinary interventions during banking crises, strengthening Kenya's preparedness to respond to financial shocks.

The law also elevates financial system stability and sound banking regulation to become secondary objectives of the Central Bank while maintaining price stability as its primary mandate.

This formally recognises the CBK's broader responsibility of promoting the integrity, resilience and proper functioning of Kenya's financial system.

To strengthen governance at the apex bank, nominees for the position of Deputy Governor will now be vetted and approved by the National Assembly before appointment, bringing the process in line with that of the Governor and enhancing parliamentary oversight.

The legislation further provides statutory recognition to the Central Bank of Kenya Institute of Monetary Studies, enabling it to collaborate with local, regional and international institutions in research, capacity building and knowledge sharing.

The amendment also clarifies the CBK's legal authority to deal in gold and other precious metals as part of reserve management, a move expected to support Kenya's growing mining sector while aligning the country with international best practice.

In addition, the Act replaces outdated references to the defunct Deposit Protection Fund Board with the Kenya Deposit Insurance Corporation, bringing the law in line with the current financial sector regulatory framework.

The Parliamentary Pensions (Amendment) Act, 2023, meanwhile, updates the Parliamentary Pensions Act of 1983 to reflect constitutional changes introduced under the 2010 Constitution, which established a bicameral Parliament.

The new law formally recognises both the National Assembly and the Senate in the administration of parliamentary pensions, ensuring senators enjoy pension benefits under the same legal framework as Members of the National Assembly.

Among the key changes, the Act raises the legal definition of a child eligible for pension benefits from below 16 years to below 18 years, aligning it with the Constitution and other Kenyan laws.

It also reconstitutes the Parliamentary Pensions Management Committee and the Appeals Committee to include representation from both Houses of Parliament.

The legislation further recognises widowers as beneficiaries of the pension benefits of deceased female Members of Parliament, correcting an omission in the 1983 law that only recognised widows.

To preserve existing public service pension policy, the amended law retains gratuity payments only for legislators who serve for less than five years.

The parliamentary pension amendments had initially been introduced during the previous Parliament but were not enacted before the expiry of its term.

Their signing now completes a legislative process aimed at updating an outdated legal framework to reflect Kenya's constitutional order and modern public service standards.