Equity Bank Kenya says it has revised interest rates charged on all its local credit facilities to reflect the new Central Bank Rate(CBR) of 10% which was passed last week by the Monetary Policy Committee of CBK.
Read; Banks Under Pressure as Central Bank Kenya lowers CBR to 10%
In a notice sent to its customers, the Bank said that from 21st of this month, interest rates chargeable on local currency credit facilities will be reduced to 14% per annum while interest payable on local currency deposits which are held in interest earning accounts will earn a minimum interest of 7% per annum.
The Banking (Amendment) Act 2016, which came into effect on September 14, requires banks operating in Kenyan soil to cap lending rates at 4% above the Central Bank Rate (CBR) which is currently at 10%. The new law also compels the banks to pay interest of a minimum of 70 percent of the Central Bank Rate (CBR) on deposits.
While addressing the media on Wednesday last week, the Central Bank Governor Dr Patrick Njoroge said that he expected existing borrowers to benefit as a result of lowering CBR. However, he warned that banks may stop lending to riskier borrowers as result of the bill to cap lending rates and now that the central bank had cut the benchmark interest rate.
“Those risky borrowers who are at the margins may be cut off from borrowing. It’s unclear which way this will go. We haven’t done it before,” said Dr Patrick Njoroge.
