CBK Governor Patrick Njoroge. FILE PHOTO | NMG
Borrowers have been spared higher cost of loans after the
Central Bank of Kenya (CBK) retained its
benchmark lending rate at 9.0 percent for the sixth time in a row as lenders continue to withhold credit to the private sector.
benchmark lending rate at 9.0 percent for the sixth time in a row as lenders continue to withhold credit to the private sector.
The monetary policy
committee says it held rates in an environment where inflation is
contained-- stable foreign exchange market.
In a
statement, it said private sector credit had grown by 4.9 percent in the
12 months to April, compared to 4.3 percent in March, predicting
further growth this year, despite banks’ complaints that a commercial
lending cap was creating a credit squeeze.
The credit
growth remained well below the central bank’s target rate of 12-15
percent, a growth adequate to support economic development.
“The
committee noted that inflation expectations remained well anchored
within the target range, but there is need to remain vigilant on
possible spillovers of recent food and fuel price increases,” CBK
Governor Patrick Njoroge said following Monday’s Monetary Policy
Committee (MPC) meeting.
The regulator pointed out that
limited private sector access is expected to be unlocked for the
remainder of this year on the back of the launch of a lending service
via mobile phone aimed at getting credit through to the country’s small
and medium-sized businesses.
The SMEs will be offered unsecured loans of between Sh30,000 and
Sh250,000, with a repayment period of between one and 12 months and
attracting an interest rate of nine per cent.
Normal
bank lending is capped at 13 per cent. Bankers say the cap limiting
commercial lending rates to four percentage points above the benchmark
has forced them to cut back on loans to high-risk groups.
CBK
said the ratio of gross non-performing loans (NPLs) to gross loans
jumped to 12.9 percent in April from 12.8 percent in February.
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