Standard Chartered Bank injected KSh6.3 billion in direct and indirect lending to Micro, Small and Medium enterprises (SME) in 9 months to September 2019, supporting more than 8,000 such enterprises in the process, the Bank’s Chief Executive Officer, Mr. Kariuki Ngari has said.
According to Ngari, the bank is conscious of the importance of SMEs to the economy and has strengthened its business model to cater to the small businesses that contribute immensely to the country’s Gross Domestic Product (GDP).
“This reiterates our commitment towards supporting lending to the private sector, particularly the Small and Medium Enterprise sector despite the prevailing capped interest rate regime,” said Ngari in a dispatch to newsrooms “
“As a bank, we appreciate the key role played by the SME sector play in sustained growth of the Kenyan economy and we like to restate our commitment to supporting the SME, and the private sector in general.” He added.
Credit crunch
Ngari welcomed parliament’s decision to repeal the cap on interest rates saying the law had stifled credit growth to SMEs.
“The repeal of the interest rate cap is a step in the right direction as it allows market forces to determine interest rates and to price risk appropriately.,” said Ngari.
Read: How SMEs Can Tap Into Facebook to Grow their Businesses
Repricing of Loans
With a section of customers concerned that banks might actually reprice loans following the revision of the law, Ngari has dismissed the possibility of that happening.
“Standard Chartered Bank would however like to reassure clients that they will not see a spike in interest rates. Over the last couple of years, we have realigned our business model and massively invested in technology to derive efficiencies which have enabled us to share the savings with our clients,” He added.
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He said the existing loan facilities will not be repriced following the repeal of the interest rate cap.
“These facilities will continue under the existing loan agreements. We are finalizing plans to roll out a fully-fledged risk-based pricing model for new facilities, which we will announce in due course,” he said.
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