Kenya Commercial Bank (KCB), the largest bank in East Africa, has reduced its lending rate from 15.6% to 14.6% in response to pressure from the Central Bank of Kenya (CBK) to lower interest rates. This move aims to promote lending, aid economic recovery, and provide access to affordable credit.
The CBK has taken a tough stance against banks hesitant to lower rates, with Governor Kamau Thugge announcing in-person bank inspections to ensure compliance. Banks that fail to reduce rates will face heavy financial daily fines under the Banking Act.
KCB’s decision follows the CBK’s move to release KES 73.7 billion ($570 million) into the economy by lowering the benchmark lending rate from 11.25% to 10.75% and the cash reserve ratio from 4.25% to 3.25%.
This reduction is expected to stimulate private sector credit growth, which has been slow due to high lending rates.
The bank’s new lending rate is effective as of February 10, and applies to all existing and new KShs-denominated facilities, excluding fixed-rate credit facilities. This move may set a trend for other lenders to follow, as reported by media outlets.
