Co-op Bank first to comply, sets interest rate at 14.5pc

August 26, 2016 5:08 pm
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In a statement, Group Managing Director and CEO Gideon Muriuki says all new credit facilities will be offered at interest rate not exceeding 14.5 percent per annum/CFM NEWS
In a statement, Group Managing Director and CEO Gideon Muriuki says all new credit facilities will be offered at interest rate not exceeding 14.5 percent per annum/CFM NEWS

, NAIROBI, Kenya, Aug 26 – Co-operative Bank has become the first bank to comply with the newly passed Bank (Amendment) Bill, 2015.

In a statement, Group Managing Director and CEO Gideon Muriuki says all new credit facilities will be offered at interest rate not exceeding 14.5 percent per annum.

“We advise that pending receipt of full guidelines from our regulator the Central Bank of Kenya particularly on the applicable base rate, all new credit facilities shall be at a rate not exceeding 14.5 percent per annum,” Muriuki said in the statement seen by Capital FD Business.

This comes two days after banks’ umbrella body Kenya Bankers Association said that although they welcome the Bill, they do not feel that an arbitrary rate cap is the best way to go.

“The banking industry, through the Kenya Bankers Association (KBA), welcomes the spirit of yesterday’s (Wednesday) decision by His Excellency President Uhuru Kenyatta to assent to the Banking (Amendment) Bill 2015,” an official statement from KBA says.

“Our reservations on some of the particulars of the Act notwithstanding, we reiterate that we will comply with the Act once it has been operationalised. Towards this end, KBA will engage with the Central Bank of Kenya on how the industry will best apply the law,” continues the statement.

President Uhuru Kenyatta Wednesday passed the bill, which set the maximum interest rate chargeable for a credit facility at 4 percent above the Base Rate set and published by Central Bank of Kenya.

“Since receiving this Bill, I have consulted widely and it is clear to me from those consultations that Kenyans are disappointed and frustrated with the lack of sensitivity by the financial sector, particularly banks. These frustrations are centred around the cost of credit and the applicable interest rates on their hard-earned deposits. I share these concerns,” President Kenyatta said in the official statement, following the signing of the Bill which limits how much interest commercial banks can charge on a loan.

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