diff --git a/nemoguardrails/rails/llm/config.py b/nemoguardrails/rails/llm/config.py
index 75efd2e04b..7f09a40eab 100644
--- a/nemoguardrails/rails/llm/config.py
+++ b/nemoguardrails/rails/llm/config.py
@@ -1566,8 +1566,11 @@ def _load_path(
                 full_path = os.path.join(root, file)
                 rel_path = os.path.relpath(full_path, config_path)
 
-                # If it's a file in the `kb` folder we need to append it to the docs
-                if rel_path.startswith("kb"):
+                # If it's a file in the `kb` folder we need to append it to the docs.
+                # Match the folder as a path component, not a name prefix, so that
+                # files/folders merely named `kb...` (e.g. `kbsettings.yml`) are not
+                # misclassified as knowledge-base docs and dropped.
+                if rel_path == "kb" or rel_path.startswith("kb" + os.sep):
                     _raw_config = {"docs": []}
                     if rel_path.endswith(".md"):
                         with open(full_path, encoding="utf-8") as f:
diff --git a/tests/test_config_loading.py b/tests/test_config_loading.py
index f3e53b1f0c..b4b918e951 100644
--- a/tests/test_config_loading.py
+++ b/tests/test_config_loading.py
@@ -14,7 +14,7 @@
 # limitations under the License.
 
 from nemoguardrails import RailsConfig
-from nemoguardrails.rails.llm.config import Instruction
+from nemoguardrails.rails.llm.config import Instruction, _load_path
 
 
 def test_default_instructions():
@@ -56,3 +56,24 @@ def test_instructions_override():
             content="Below is a conversation between a helpful AI assistant and a user.\n",
         )
     ]
+
+
+def test_load_path_kb_prefixed_names_are_not_dropped(tmp_path):
+    # A file or folder whose name merely starts with "kb" (but is not inside the
+    # `kb/` knowledge-base folder) must be loaded normally, not silently dropped
+    # as an empty knowledge-base doc.
+    (tmp_path / "kbsettings.yml").write_text('sample_conversation: "hello world"\n')
+    (tmp_path / "kbase").mkdir()
+    (tmp_path / "kbase" / "greeting.co").write_text("define flow greeting\n  bot express greeting\n")
+    # A genuine kb/ document must still be collected as a doc (control).
+    (tmp_path / "kb").mkdir()
+    (tmp_path / "kb" / "doc.md").write_text("# real kb doc\n")
+
+    raw_config, colang_files = _load_path(str(tmp_path))
+
+    # kb-prefixed config file is parsed, not dropped.
+    assert raw_config.get("sample_conversation") == "hello world"
+    # kb-prefixed subfolder's colang file is registered.
+    assert any(name == "greeting.co" for name, _ in colang_files)
+    # a genuine kb/ document is still collected as a doc (control).
+    assert {"format": "md", "content": "# real kb doc\n"} in raw_config.get("docs", [])