The 20-year-old winger has been linked with a number of clubs in the Championship, but has chosen to make the move instead to John McGlynn’s side.
Last campaign, he had two loan spells away from Ibrox at Hamilton Accies and Dunfermline Athletic.
Falkirk boss John McGlynn says he is looking forward to linking up with the youngster again.
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Kennedy played for the ex-Raith Rovers boss 19 times in the 2020/21 Championship season, with Stark’s Park team reaching the promotion play-offs.
“He’s going to be in competition with the guys who are already in the team, and he needs to force himself in which is exactly what he’s going to try and do,” McGlynn said.
“It will breed good competition with others trying to play well to stay in the team.
“Kai is a player Paul and I have worked with previously at Raith Rovers. We enjoyed working with him and he enjoyed working with us, and we hope that will be the same again.
"Kai gives us real competition in the wider areas, he can play at both sides and in a number 10 position.
“Kai has come here to do well, he wants to kick his career on and we’re looking to help him, and all the other players here at Falkirk with that.
"We’re still looking within the transfer market, and we are still hopeful that we’ll be bringing others in. I would like to thank everyone at Rangers who has made this loan deal possible.”