CfC stanbic and KCB have become the first banks to cut interest rates for existing loans in line with a new law that caps the cost of credit at 400 basis above the prevailing Central Bank base lending rate.
The two banks saidthe new rates for both old and new loans at CFC would 14.5 per cent based on the current Central Bank rate of 10.5 per cent. Co-operative Bank had reduced interest rates for new loans awaiting guidelines from the government on how to treat existing loans.
KCB Bank Kenya said it will adjust all existing loans to not more than 14.5% as part of the industry commitment to pass these benefits to customers. “Both new and existing loans will enjoy the 14.5% cap on rates and we urge customers to get in touch with their branches to review and amend their banking facilities documents to reflect the new interest rate regime,” said KCB Group CEO and Managing Director Joshua Oigara.
This new rates will apply from tomorrow 1st September, 2016. “We have heard the voice of Kenyans and KCB Bank Kenya will ensure that customers are not disrupted in any way and as much as possible address any negative impact this may have to the broader economy such as the SME sector and the unbanked population.
In addition, KCB has also committed 5% of its loan book to support SMEs through the Kenya Bankers Association (KBA) Inuka programme for three years in which women and youth will enjoy 14.5% interest rate once their credit applications are successful.
Majority of lenders are awaiting Central Bank directive on existing loans. Other lenders who have reduced their lending rates on new loans are Co-operative Bank, Kenya Commercial Bank, Standard Chartered and Barclays.
[crp]
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