(Nairobi) – The Central Bank of Kenya (CBK) has summoned commercial bank executives to address their reluctance to lower lending rates in line with recent cuts in the Central Bank Rate (CBR). Despite reductions aimed at stimulating economic growth, some banks continue to offer loans at high interest rates, while deposit rates for customers have been swiftly reduced.
CBK Governor Kamau Thugge has emphasized the importance of reducing lending rates to boost credit access for households and businesses. “I have scheduled three meeting sessions with all CEOs of commercial banks and mortgage finance companies to discuss this important matter,” Thugge noted in a notice seen by The Ankole Times. The first meeting occurred yesterday, with additional sessions scheduled for today and tomorrow at CBK’s head office in Nairobi.
Last Wednesday, CBK dismissed rumors about the stability of Kenya’s banking sector, labeling them “false information” that could have triggered unnecessary panic withdrawals. While affirming the sector’s stability, CBK raised concerns about the slow adjustment of lending rates.
In October, the Monetary Policy Committee (MPC) cut the CBR from 12.75% to 12%, following an earlier reduction from 13% in June. The cuts were supported by declining inflation, which dropped to 2.7% in October from 3.6% in September. However, CBK noted a significant slowdown in private-sector credit growth, which fell to 1.3% in August compared to 3.7% in July.
Data from commercial banks reveals discrepancies in lending rates:
| Bank | Interest Rate (%) |
|---|---|
| Premier Bank | 9.00 |
| Access Bank | 11.42 |
| Consolidated Bank | 12.44 |
| Kingdom Bank (SME Focused) | 13.99 |
| Cooperative Bank | 14.88 |
| KCB | 16.02 |
| National Bank | 16.51 |
| NCBA | 16.91 |
| I&M Bank | 18.24 |
| Absa | 20.02 |
| HFC (Mortgage Focused) | 20.50 |
While lenders such as DTB and Cooperative Bank have reduced their rates, others, including KCB and Absa, continue to charge significantly higher rates. Equity Bank recently announced reductions, lowering its reference rate from 17.83% to 17.39% for all new and existing shilling-denominated loans.
Governor Thugge emphasized the importance of aligning lending practices with reduced benchmark rates to spur economic activity, particularly in light of the recent decline in inflation and the need for increased credit access.