Microfinance banks in Kenya occupy a useful middle layer between commercial banks (which often won't lend to small traders without payslips) and digital lenders (which charge 25-100% APR for short-term loans). The CBK-licensed microfinance banks combine deposit services like a bank with group-lending and individual-business lending models that fit Kenya's informal economy. This guide tours the major players, what each is best at, and the paybill numbers you need to actually deposit and repay.
What a microfinance bank actually is
A Deposit-Taking Microfinance Institution (DT-MFI), often called a microfinance bank, is a CBK-licensed institution that:
- Accepts deposits like a commercial bank (savings, fixed deposits)
- Lends primarily to small traders, women's groups, and SMEs
- Uses group lending models (chama-style joint liability) alongside individual loans
- Operates branches and ATMs, with mobile banking integration
- Is regulated by CBK under the Microfinance Act, 2006
Critically, deposits at licensed microfinance banks are protected by the Kenya Deposit Insurance Corporation (KDIC) up to KES 500,000 per depositor, same as commercial banks.
Kenya Women Microfinance (KWFT)
Paybill: 101200 · CBK-licensed 31 March 2010 as "Kenya Women Microfinance Bank PLC", head office at Akira House, Kiambere Road, Upper Hill, Nairobi, 31 branches [Source 1]. Widely reported as the largest MFB in Kenya by member base (unverified against a single primary source).
KWFT serves over 850,000 women in Kenya through women-only group lending. The structure:
- Form a group of 10-30 women (a chama / merry-go-round structure)
- The group meets weekly or bi-weekly
- Members contribute weekly savings
- Loans are guaranteed by the group, joint liability if a member defaults
- Loan multiplier typically 3x-4x your savings
- Interest rates 14-18% reducing balance
KWFT also serves men in joint accounts (with a wife / partner) and runs SME lending for women-led businesses. Best for: rural and peri-urban women starting small businesses.
Faulu Microfinance
Paybill: 328585 · CBK-licensed 21 May 2009 as "Faulu Microfinance Bank Limited", 39 branches nationwide, head office at Faulu Kenya House, Ngong Lane off Ngong Road [Source 1]. Owned by Old Mutual Group; strong on SME lending and mortgages (ownership and product-mix claims unverified against a single primary source).
Faulu is widely reported as the largest microfinance bank by asset base (unverified against a single primary source). It offers:
- Personal loans against payslip, competitive rates with commercial banks
- SME asset finance (vehicles, equipment, premises)
- Microfinance group lending
- Faulu Mortgage Plus, competitive home loans with longer terms than most banks
- Savings products with 7-9% interest on fixed deposits
Best for: small business owners with some formal track record, looking for a step up from digital lending without paying commercial bank rates.
SMEP Microfinance
Paybill: 777001 · CBK-licensed 14 December 2010 as "SMEP Microfinance Bank Limited", 7 branches, head office at SMEP Building on Kirichwa Road off Argwings Kodhek Road, Nairobi [Source 1]. Christian values orientation, mixed group and individual lending.
SMEP (Small and Micro Enterprise Programme) was founded as part of the Christian Outreach Programme. It runs:
- Group lending similar to KWFT but mixed-gender
- Individual SME loans
- Education loans (school fees products)
- Asset finance and personal loans
- Faith-based financial training programmes
Rates and structure similar to other MFBs. Distinctive on its faith-rooted training component.
Rafiki Microfinance Bank
Paybill: 802200 · CBK-licensed 14 June 2011 as "Rafiki Microfinance Bank Limited", 17 branches, head office at Rafiki House, Biashara Street, Nairobi [Source 1]. Subsidiary of the Chase Bank Group originally; now independently operating.
Rafiki targets the urban SME segment more than rural women's groups. Strong on:
- Trader loans for kiosk and small retail business owners
- Asset finance for matatus and boda boda
- Working capital loans for traders
- Quick personal loans against payslip
Caritas Microfinance Bank
Paybill: 248700 · CBK-licensed 2 June 2015 as "Caritas Microfinance Bank Limited", 2 branches, head office at Cardinal Maurice Otunga Plaza, Kaunda Street, Nairobi [Source 1]. Catholic Church-affiliated, founded by the Archdiocese of Nairobi.
Caritas is one of the newer MFBs but has grown quickly. Focus areas:
- Small business loans for parishioner-traders and SMEs
- Education savings products
- Asset finance (smaller than Faulu but competitive)
- SACCO group lending
Musoni Microfinance
Paybill: 514000. Musoni is not listed on the CBK Directory of Licenced Microfinance Banks as of February 2026 [Source 1]. Musoni Kenya operates as a non-deposit-taking microfinance / credit provider outside the CBK MFB category (verify current licensing status directly with Musoni before opening an account for deposits).
Musoni is digitally-native, all loan disbursements and repayments are via M-PESA, no cash handling at branches. Best for:
- Borrowers who already use M-PESA actively for business
- Group lending with simpler operations than KWFT
- Slightly faster processing because of digital workflows
Other licensed microfinance banks
Additional entities on the CBK Directory of Licenced Microfinance Banks (Feb 2026) [Source 1] not covered in depth above are Branch Microfinance Bank Limited, Choice Microfinance Bank Limited, Umba Microfinance Bank Limited, LOLC Kenya Microfinance Bank PLC, Sumac Microfinance Bank Limited, U & I Microfinance Bank Limited, Salaam Microfinance Bank Limited, On It Microfinance Bank Limited and Muungano Microfinance Bank PLC, bringing the current total of licensed MFBs to 14.
Yehu Microfinance Trust and Juhudi Kilimo, sometimes bundled with MFBs, are not on the CBK MFB register as of February 2026 [Source 1] and operate as trust-based or non-deposit-taking credit providers. Deposits at those entities are not KDIC-insured.
- Yehu Microfinance Trust (606303), coast-region focus (not a CBK-licensed MFB per Feb 2026 register)
- Juhudi Kilimo, agricultural microfinance (not a CBK-licensed MFB per Feb 2026 register)
MFB vs commercial bank vs digital lender
| Feature | MFB | Commercial bank | Digital lender |
|---|---|---|---|
| Loan rate | 14-22% APR | 14-20% APR | 30-100%+ APR |
| Loan term | 3-36 months | 1-25 years | 1-90 days |
| Need payslip? | Sometimes | Usually yes | No |
| Loan size | KES 5k - 5M | KES 50k - unlimited | KES 500 - 50k |
| Deposit-taking | Yes (KDIC-insured) | Yes (KDIC-insured) | No |
| Group lending | Yes | Rarely | No |
How to pay MFB loans via M-PESA
- Open M-PESA → Lipa na M-PESA → Pay Bill
- Enter the MFB's paybill (see list above)
- Enter your loan account / member number as the account
- Enter the repayment amount
- Confirm with PIN
Most MFBs credit M-PESA payments to your loan within 1-3 hours. For group loans, the group treasurer typically consolidates payments before remitting, confirm whether you pay individually or through the group.
How to choose an MFB
- Already in a chama? Continue with the MFB the chama uses.
- Solo trader, no group? Faulu or Rafiki for individual loans.
- Woman-only women's group? KWFT, they're the specialist.
- Want digital-only? Musoni.
- Mortgage interest? Faulu has the deepest mortgage offering of the MFBs.
- Christian community ties? Caritas (Catholic) or SMEP (Christian).
- Agricultural focus? Juhudi Kilimo or Yehu (coast).
Things to watch for
- Joint liability. In group lending, if another group member defaults, the group covers, your savings can be partially withheld. Choose your group carefully.
- Tied insurance. Some MFBs require you to buy credit life insurance from a specified insurer. Read the small print, sometimes you can request an alternative.
- Effective vs nominal rate. A 1.5% monthly nominal rate sounds low but equals roughly 18% APR. Always ask for the APR equivalent before signing.
- Insurance and processing fees. Loan setup fees can add 2-4% to total cost. Budget for these.
- CRB listing on default. MFBs report defaults to CRB the same way banks do. A defaulted MFB loan damages your credit for years.
FAQ
Which is the best microfinance bank in Kenya?
Depends on use case. KWFT for women's groups, Faulu for SME and mortgage, Musoni for digital-native borrowers, Caritas for parishioner-trader networks. No single "best".
Are MFB rates really better than commercial banks?
Not always, for borrowers with payslips, commercial banks often beat MFBs. MFBs win for borrowers without formal employment income or those needing group-lending structures.
Can I just save with an MFB without borrowing?
Yes, MFBs offer savings accounts, fixed deposits, and group savings accounts. Deposits are KDIC-insured up to KES 500,000.
Do MFBs have mobile banking apps?
Most do. KWFT has KWFT Bizz and KWFT app, Faulu has Faulu Online, Musoni is fully digital. Smaller MFBs may rely more on USSD codes.
Sources
- Central Bank of Kenya, "Directory of Licenced Microfinance Banks", February 2026 publication, centralbank.go.ke/wp-content/uploads/2026/02/Directory-of-Licenced-Microfinance-Banks-Feb-2026.pdf, accessed 27 August 2026. Lists 14 licensed MFBs with head-office address, licence date and branch count for each.
Resources
- Central Bank of Kenya, list of licensed microfinance banks
- All lending paybills on paybillke
- All bank paybills on paybillke
- SACCOs as an alternative to MFBs