The Central Bank of Kenya (CBK) has blamed mounting banking sector woes on weak lending policies and management failure.
While speaking to journalists on Wednesday, CBK governor Patrick Njoroge said that high non-performing loans in the sector could have been as a result of weak lending policies laced with management failures and interests.
He also urged shareholders to raise questions on lenders' Non Performing Loans (NPLs) provisions in future investor briefings.
The regulator also indicated that it will implement more stringent checks of bank books that will incorporate the use of technology even after National Bank managers were sent home following an audit by the board.
"We are going for stringent auditing of bank books including IT audits," the governor said.
Mr Njoroge revealed that the board of the NBK - which reported a staggering Sh1.2 billion loss on the back of loan loss provisions which went up from Sh525.3 million in 2014 to Sh3.72 billion in 2015 - had approached the regulator to report its issues before action was taken.
The board of the collapsed Imperial Bank similarly approached CBK last year just before it went into receivership, becoming the second lender after Dubai Bank to be put under statutory management since the governor took charge in July.
Mr Njoroge also stressed that commercial banks would now be expected to shift from a culture of competition for profits to one of factual presentation of their books to investors and the public.
He noted that Kenyan banks' lending rates still needed to fall further and that most cash liquidity (80 per cent) is in seven of Kenya's 42 commercial lenders.
The governor however refused to comment on rumours surrounding Chase Bank circulating on social media, saying that he would not be making any remarks on individual lenders.
Chase Bank has attracted attention after its earnings dropped from a profit of Sh2.3 billion in 2014 to a loss of Sh742 million in the year ended December 2015.