Banks start issuing KESONIA-priced loans today, marking the official rollout of the Central Bank of Kenya’s revised Risk-Based Credit Pricing Model (RBCPM).
- •The shift links to the overnight interbank rate published daily by CBK, creating a tighter, faster transmission channel between monetary policy and borrowing costs.
- •Borrowers might even see cheaper pricing next week if the MPC cuts the CBR on December 9, since KESONIA reacts quickly to policy adjustments.
- •The revised pricing model applies to old loans only from February 28, 2026, after the six-month adjustment window.
Although the RBCPM was announced in August 2025, today is the first day it takes effect for all new variable-rate loans. The new formula- total lending rate=KESONIA + Premium (K)- allows banks to price credit more transparently by separating the reference rate from the institution-specific premium. Fees and charges are then added to calculate the total cost of credit. This structure is meant to enhance market discipline, align Kenya with global benchmark practices, and improve the clarity of loan pricing for customers.
KESONIA itself is not new; it is simply the renamed overnight interbank average, calculated as a volume-weighted average of actual unsecured overnight transactions among banks. The renaming aligns Kenya with reforms seen in markets that adopted SONIA in the UK and SOFR in the US. Because the rate closely tracks the Central Bank Rate, any change in the CBR will now feed through more directly into the lending rates.
Banks are also required to publish their weighted average lending rates, premiums, and fees for each loan product on both their own websites and the Total Cost of Credit portal, reinforcing transparency across the sector.
Although the revised pricing framework becomes effective today, the direction of lending rates will largely depend on the Monetary Policy Committee’s decision on December 9th. Should the MPC continue easing, KESONIA would adjust almost immediately, making new loans cheaper shortly thereafter.
