An M-Pesa and Equity agent shopfront in Kenya. File photo, illustrative. Photo: Fiona Graham / Wikimedia Commons (CC BY-SA 2.0)
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Bankers Issue Fresh Demand to CBK Over Loan Interest Rates.
Kenyan bankers have made a fresh set of demands to the Central Bank of Kenya over the way loan interest rates are set, according to the source credited below.
Background
Kenyan lending rates are shaped by the Central Bank's policy rate, by the risk-based pricing models each bank submits for approval, and by the cost of deposits. When the policy rate falls, lending rates have historically been slow to follow, and the argument between the regulator and the banks turns on whether that lag reflects genuine funding costs and non-performing loans, or simply the absence of competition. The Central Bank has previously used moral suasion and approval of pricing models rather than direct caps, having seen the effects of the interest rate cap that was in force between 2016 and 2019.
Why it matters here
Credit in Kibra rarely comes from a commercial bank at all. Traders here borrow from chamas, from SACCOs and from mobile lenders whose effective rates dwarf anything in the banking argument, and when bank lending tightens the shift towards those informal and digital lenders becomes more pronounced. The rate a bank charges a mid-sized enterprise still matters locally, because that enterprise is often the one buying stock from a Toi Market trader.
What to watch next
What the Central Bank concedes or refuses, whether average lending rates actually move, and what happens to mobile lending volumes in the meantime.
This story was put together by K N N from material first published by Kenyans dot co dot ke.
That was a Kibra News Network report, read by an A I voice.
Kenyan bankers have made a fresh set of demands to the Central Bank of Kenya over the way loan interest rates are set, according to the source credited below.
Background
Kenyan lending rates are shaped by the Central Bank’s policy rate, by the risk-based pricing models each bank submits for approval, and by the cost of deposits. When the policy rate falls, lending rates have historically been slow to follow, and the argument between the regulator and the banks turns on whether that lag reflects genuine funding costs and non-performing loans, or simply the absence of competition. The Central Bank has previously used moral suasion and approval of pricing models rather than direct caps, having seen the effects of the interest rate cap that was in force between 2016 and 2019.
Why it matters here
Credit in Kibra rarely comes from a commercial bank at all. Traders here borrow from chamas, from SACCOs and from mobile lenders whose effective rates dwarf anything in the banking argument, and when bank lending tightens the shift towards those informal and digital lenders becomes more pronounced. The rate a bank charges a mid-sized enterprise still matters locally, because that enterprise is often the one buying stock from a Toi Market trader.
What to watch next
What the Central Bank concedes or refuses, whether average lending rates actually move, and what happens to mobile lending volumes in the meantime.
KNN Newsroom is the staff byline for stories written, rewritten and edited at the Kibra News Network desk. Where a story credits an outside outlet, the original source is linked at the foot of the piece.
