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Co-op Bank complies with new law, caps interest rate at 14.5pc

GIDEON-MURIUKI

NAIROBI, Kenya, Aug 26 – Cooperative Bank has become the first bank in Kenya to comply with the newly passed Bank (Amendment) Bill.

In a statement, Group Managing Director and CEO Gideon Muriuki has instructed that going forward, new credit facilities be at interest rates that do not exceed 14.5 percent per annum.

“In the foregoing and for business continuity, 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% p.a (being current Central Bank Rate of 10.5% + 4%),” read the memo sent to all branch managers and lending units

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.

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.

Read: Bank stocks reacts negatively to new interest rates law

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