At least seven Kenyan banks have issued notices to bring down their lending rates as they scramble to forestall a law on capping the charges.
President Uhuru Kenyatta is expected to reject or assent to a proposed law to limit interest rate commercial banks charge their customers.
Parliament passed the Bill, which seeks to cap interest rates at 4 percent above the prevailing Central Bank Rate, about two weeks ago igniting debate that has seen banks come under fire for charging rates as high as 27 percent.
In issuing notices to cut their interest rates, the institutions do not want to be caught flat-footed should the President sign the bill into law.
The banks, in a growing list, have promised to lower their charges starting Aug. 25 as pressure piles on the institutions accused of profiting at the expense of their customers.
The latest financial institutions to announce they will lower their rates are mid-tier lenders such as Bank of Baroda, Family Bank, National Bank and Bank of Africa.
The four join three others that announced their intentions to lower lending rates during the week. The four join three others that announced their intentions to lower lending rates during the week. The four join three others that announced their intentions to lower lending rates during the week. The four join three others that announced their intentions to lower lending rates during the week.
The banks said in notices published Friday they will lower their charges starting Aug 25 by between 97 and 100 basis points.
The Central Bank of Kenya (CBK) slashed the Kenya Banks Reference Rate (KBRR), which they use to calculate their lending charges, about a month ago by a similar margin.
Standard Chartered Bank, I&M Bank and Commercial Bank of Africa (CBA) during the week said they will align their lending rates based on KBBR, which currently stands at 8.9 percent.
“We are pleased to advise that the interest rate charged on your credit facilities will be adjusted accordingly in line with the KBBR,” said CBA.
“As per the directive of CBK, the KBBR component of our interest rate will stand reduced to 8.9 percent per annum with effect from August 25,” said I&M.
Kenya Bankers Association chief executive Habil Olaka assured the banks will lower their rates by up to 100 basis points as the lenders proposed a raft of initiatives to cut cost of loans.
“We expect banks to start using the credit reference bureaus framework on credit score together with the product type and loan tenures to classify borrowers into either low, medium or high risk,” he said.
But critics are dismissing the move as too little too late, urging President Kenyatta to sign the proposed law as banks had a chance to lower their charges but they did not.
Jude Njomo, a legislator who sponsored the bill in Parliament, described the banking industry proposal to lower lending rates by up to 100 basis points as a public gimmick.
The MP noted the move is aimed at arm-twisting the President and hoodwinking Kenyans.
Kenyans have unanimously rallied behind the proposal to cap interest rates, accusing banks of exploitation.
Source: Nam News Network