Kenya Commercial Bank (KCB) has announced a reduction in loan interest rates to the maximu 14.5 per cent specified by the Banking (Amendment) Act signed by the President last week. The largest bank by asset now becomes the second lender to publicly declare compliance with the new law that has been celebrated by many borrowers who felt banks were charging too much for credit.
“In full compliance with Banking (Amendment) Act, all new facilities from KCB Bank Kenya Limited have been capped at 14.5 per cent as of today, Monday 29th August, 2016. Existing loan facilities remain priced as previously negotiated until further guidance from Central Bank of Kenya,” KCB said in a statement.
The message was widely circulated to customers through text messages as others took to social media to verify. This means those borrowing from the bank on Tuesday will be charged at the new rate but the bank did not disclose whether there would be any new terms and conditions on the lowered rate.
Cooperative Bank last week announced a similar move and asked those with existing loans to visit the bank and refresh their offer letters, meaning signing new agreements. Other banks contacted gave varying responses when asked whether they would follow suit soon.
A well-placed source within Equity Bank, who requested not to be named as his response would need approval, told said the bank was yet to comply with the new law as the Central Bank had not given proper guidance on the way forward.
CFC Stanbic Bank said it was awaiting the gazettement of the new law to begin effecting it.
It could not be established immediately how other lenders, including Barclays Bank, National Bank and Standard Chartered Bank, had reacted to the new law. Kenya Bankers Association chief executive Habil Olaka said the banks would announce their reactions individually “in due course”.
“Most banks will announce to their customers any changes in due course,” Mr Olaka said in an SMS message.
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