By Ronald Owili
NAIROBI, Feb 15 – The Central Bank of Kenya, which has been calling of commercial banks operating in the country to reduce their lending rates, has published a list of the interest rates which the commercial banks are charging borrowers.
According to the list made public by the central bank here, the Middle East Commercial Bank and K-Rep Bank were charging the highest interest rates of 26.4 and 24.2 per cent respectively while Housing Finance offered the cheapest loans.
On average, the banks were charging interest rates of 18.3 per cent on loans. The credit pricing in the country by commercial banks has been a cause of concern for many.
With banks reluctant to reduce lending rates to spur borrowing among consumers, the government has been forced to slash domestic borrowings to finance the budget.
According to the CBK, a lack of transparency in credit pricing by lenders can expose borrowers to high lending rates.
According to the list published by the central bank, the average weighted lending rates comprising three loan products — personal, business and corporate loans — Middle East Commercial Bank had the highest rate of 24.6 per cent, followed by K-Rep bank at 24.4 per cent and Guaranty Trust bank at 23.8 per cent.
A the lower end, Housing Finance Company charged 15.2 per cent, Family Bank 15.5 per cent and Guardian Bank 15.6 per cent.
As for the six largest banks in Kenya, Equity Bank priced its loans at 19 per cent, Barclays Bank and StanChart Bank both at 18.5 per cent, CFC Stanbic 17.8 per cent, Co-operative Bank 17.5 per cent and KCB at 17.3 per cent.
The CBK says in a statement: “Publication of average lending rates for commercial banks is expected to increase transparency and enable the borrowing public to making informed borrowing decisions.”
CBK says the published interest rates only constitute the banks’ lending rates, noting that banks may levy other fees and charges, which can further push up the cost of loans.