The banking regulator last year fined 13 commercial lenders for improper practices.
The number of rogue lenders, which the Central Bank of Kenya (CBK) did not name, rose by four compared to those fined a year earlier for various breaches.
"During the year ended December 31, 2022, 13 commercial banks violated the Banking Act and CBK Prudential Guidelines compared to nine commercial banks in the previous year 2021," said CBK in its Bank Supervision Annual Report 2022 published on Monday.
"Most of the violations were in respect to breach of single obligor limit mainly due to decline in core capital in some banks that have continued to report losses."
Also known as the Single Borrower's Limit, the single obligor limit intends to limit or restrict a bank's risk of exposure to single borrowers by preventing banks from extending large credit accommodations to one borrower or a group of related borrowers.
Outgoing Governor Patrick Njoroge has been piling pressure and personal liability on lenders that breach prudential guidelines. Dr Njoroge, who is set to leave office next month after serving a final second term of four years, has taken a more stringent approach to banking violations and emphasised compliance during his term.
CBK said several lenders that struggled with capital adequacy and liquidity issues were penalised.
The regulator fined banks for failing to meet capital and liquidity requirements as well as corporate governance breaches.
The regulatory filings by CBK show 10 lenders fell short of rules restricting lending to a single borrower to an amount of not more than 25 per cent of its core capital.
Five banks breached the prohibited business rule, which limits total insider borrowings to 100 per cent of core capital. One commercial bank violated CBK Prudential Guideline on Corporate Governance, which requires commercial banks to have at least five directors and at least three-fifths should be non-executive directors, said CBK.
Another commercial bank violated the Banking Act due to lending more than 25 per cent of the total deposits to real estate and was consequently fined. "Appropriate remedial actions were taken on the concerned institutions by CBK in respect of the violations," said the regulator.