Late last month, members of parliament approved a bill limiting commercial lending rates at four percent above the central bank’s benchmark rate, putting pressure on commercial banks to lower their lending interest rates.
The banks were being accused of operating cartel like practices to keep interest rates high and three banks now are beginning to yield to the public pressure reducing interest rates on loans.
Three banks on Friday August 12 announced that they will be lowering the interest rates on loans by up to one percent.
Barclays Bank was the first to cut its loan rates after the Central Bank of Kenya (CBK) lowered the standard base rate last month, turning the spotlight on other lenders.
The Bank of Baroda and Family Bank announced they will lower the cost of credit by 0.97 percent from the 25th of August.
The National Bank indicated it will effect its move on the 1st of September lowering its interest rate by one percent on all Kenya shillings denominated loans.
This follows reduction of the Kenya banks reference rate from 9.13 per cent to 8.54 per cent by the Central Bank.
Also last week, Barclays announced a promotional mortgage rate of 11.9 per cent underlining its aggressiveness to grow its loan book which has been stagnant in recent years.
KBA, an umbrella body of lenders, had agreed to cut their lending rates by a 100 basis points as they seek to stave off a political plan to cap the interest rates through legislation.
As the bankers lobby group say lowering of interest rates will force banks to stop lending to high-risk borrowers claims that Members of Parliament led by Kiambu MP Jude Njomo termed dishonest.
Source: Citizen TV.