A Co-op Bank banking hall. PHOTO | FILE
By CHARLES MWANIKI, @cmkangangi cmwaniki@ke.nationmedia.com
Co-operative Bank has capped pricing of all new loans
at 14.5 per cent, becoming the first bank to indicate it is complying
with the new law on interest rates even as banks continue to argue that
they are unsure of the base rate to use for loans.
In a break with the position of the Kenya Bankers
Association (KBA) that lenders would wait for guidelines before
effecting any changes to their lending structure, Cooperative Bank cited
the section of the Act that bars any new loan contract exceeding the
prescribed rate as the reason for its move.
“In the foregoing and for business continuity, we
advise that pending receipt of full guidelines from our regulator the
Central Bank of Kenya particularly on the applicable base rate, all new
credit facilities shall be at a rate not exceeding 14.5 per cent per
annum (being current Central bank Rate of 10.5 per cent plus four per
cent),” said Cooperative bank chief executive officer Gideon Muriuki in a
memo to all branch managers and lending units.
The lender, Kenya’s second largest by market share,
was however silent on whether it will immediately implement the minimum
rate set by the law for interest earning deposit accounts, which has
been pegged at 70 per cent of CBR.
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