NAIROBI, Kenya, Sep 1 – Members of the Kenya Bankers Association (KBA) have agreed to re-price interest rates for existing loans to 14.5 percent following the new banking law capping interest rates to 4 percent above the Central Bank’s lending rate.
The association says each KBA member bank will notify their customers on the process and new terms as the industry engages with Central Bank of Kenya on implementation of the new law.
“The voice of Kenyans has come out strongly that banks need to better serve their customers and pass on the benefit of enhanced efficiencies to borrowers and depositors. We appreciate this sentiment and are committed to win back the trust of the banking public by meeting their expectations,” the association stated.
KBA members have also agreed to minimise any unintended negative consequences on the broader economy, such as a reversal of the positive strides made towards financial inclusion through certain groups of people and SMEs being excluded from access to banking services.
“Our member banks will work to enhance their lending practices and customer service standards to ensure that customers are better served and informed about their financial options,” the association noted.
Already KCB Group, CfC Stanbic, Co-operative Bank, Chase Bank and GT Bank have already bowed fully to the new law.
KCB Group says borrowers may choose to reduce the period they will clear the loans, go for a top-up or maintain the tenure, which will mean lower instalment payments.
“The exercise of reviewing the current facilities will commence today, and we urge our customers to get in touch with their branch managers in case of any additional information as we re- price the terms of the existing loans,” said KCB Group Chief Executive Joshua Oigara at a news conference.
He says there is a lot of excitement in the market as customers are enquiring for top ups as well as new loans.
Earlier banks had indicated the new law will not affect existing loans stating it was unclear whether it will affect loans procured before President Uhuru Kenyatta’s assent.
They had also signalled credit rationing especially to the Small and Medium Enterprises (SMEs) saying banks will be forced to prioritise low risk borrowers.