Kenya’s banking sector, under the Kenya Bankers Association (KBA), has pledged to reduce lending rates in response to recent Central Bank of Kenya (CBK) monetary policy decisions. The move is expected to spur economic growth by making borrowing more affordable for individuals and businesses, a critical step in alleviating financial constraints amid Kenya’s high cost of living.
The statement from KBA Chairman John Gachora emphasizes that the banking industry is aligning its rates with cuts in the Central Bank Rate (CBR). “Banks are taking steps to lower interest rates and make borrowing more affordable,” said Gachora.
From December 2024, individual banks will issue notices to customers, reflecting progressive reductions in loan interest rates. These reductions will align with evolving credit risk factors and monetary policies. The commitment comes against a backdrop of rising financial challenges, with KBA acknowledging that many borrowers face constraints such as delayed payments, reduced disposable incomes, and elevated consumer risks.
“Our mandate as a banking sector is to assess customers’ risk profiles and price their credit accordingly,” noted Gachora. He highlighted that the move to a risk-based pricing model ensures that base rates reflect CBK guidelines while accounting for the challenges customers face in servicing loans.
KBA has also pledged to collaborate with the government and stakeholders to address systemic barriers to affordable credit. Key initiatives include resolving delayed payments to businesses, unlocking litigation backlogs, and reviewing risk-based pricing models.
“As the banking industry, anchored on our determination to spur economic growth and development, we remain committed to creating a more accessible, affordable, and sustainable lending environment,” Gachora affirmed.
