Banks promise not to take advantage of interest cap removal

Kenya Bankers Association Chairman Joshua Oigara at a past banking sector function PHOTO | KBA Kenya Bankers Association Chairman Joshua Oigara said banks would price loans reasonably, and customers should not accept sudden increases in interest rate.

“The fear that we will be unreasonable is unwarranted as we have repriced ourselves in the last three years. The pricing by banks is not something you wake up and roll the dice on,” Oigara said.

NCBA Managing Director John Gachora says new interest rates will however be anchored on the prevailing market conditions which until now compose of lower yields on government paper, and contained inflation.

Banks have vowed not to go back to the exorbitant interest rates they were charging before the introduction of the rate caps which was removed on Tuesday.

Speaking on Wednesday at the re-launch of the micro-business targeted Stawi loan app, Kenya Bankers Association Chairman Joshua Oigara said banks would price loans reasonably, and customers should not accept sudden increases in interest rate.

“The fear that we will be unreasonable is unwarranted as we have repriced ourselves in the last three years. The pricing by banks is not something you wake up and roll the dice on,” Oigara said.

The lenders have anchored the expected retention of current interest rates on recent sector reforms that have by the bank’s account created order and transparency in the issuance of loans to clients.

In March this year, the commercial lenders adopted the Central Bank of Kenya (CBK) Banking Sector Charter of 2018 which sought to open up commercial lending to public scrutiny.

Among the taunted corrective measures by banks is the move towards risk based credit pricing and the open declaration of all loan servicing fees and commissions.

Already, Kenya’s largest bank by asset base; KCB, says customers with high risk profiles may only see a two to three percent hike in interest charges

“Banks have reached a new business model. We lend to current customers at 13% because we have accepted their risk profile as an industry. That will not change the next day,” noted the bank in a statement.Nevertheless, the public distrust of commercial banks has only heightened in the post-rate cap environment as many fear a return to the previously exorbitant rates.Even so, MPs opposed to the re-introduction of the free-enterprise regime in the credit market have vowed to stay fixated on the bank’s behavior in the post-rate cap while promising even […]

Stay in the Know!

Sign up for the latest news and information on African Companies and Economy.

By signing up, you agree to receive MoneyInAfrica offers, promotions and other commercial messages. You may unsubscribe at any time.

Leave a Reply