KCB Bank Kenya has reduced its base lending rate from 15.6% to 14.6% per annum, effective February 10, 2025. The final lending rate will be determined by a customer-specific margin, applied to the base rate in accordance with the approved Risk-Based Credit Pricing Model.
“KCB Bank Kenya wishes to notify our customers and the public that we have reduced our base lending rate from 15.6% to 14.6% per annum. This reduction takes effect from February 10, 2025.” read a statement from the lender.
Read: CBK Cuts Lending Rate for Fourth Consecutive Time
This change applies to all existing and new Kenyan Shilling-denominated credit facilities, excluding fixed-rate loans, which remain unchanged. Additionally, both new and existing borrowers will benefit from the reduced interest rates on loans.
KCB Bank’s rate cut aims to reduce borrowing costs, alleviating financial strain on customers while fostering economic growth. The adjustment is expected to benefit businesses and individuals struggling with high living costs and previous periods of elevated interest rates.
KCB Bank is the second major financial institution to revise its base lending rate following a similar move by The Co-operative Bank of Kenya. Co-op Bank recently reduced its base rate from 16.5% to 14.5% per annum, with final lending rates determined by an additional margin ranging from 0% to 4% depending on the borrower’s credit profile.
Read: Co-op Bank Reduces Base Lending Rate by 2%
The adjustments follow CBK’s recent reductions in the Central Bank Rate (CBR) and the Cash Reserve Ratio (CRR). The CBK lowered its benchmark interest rate from 11.25% to 10.75% and cut the CRR from 4.25% to 3.25%. These changes released Ksh 73.7 billion into the banking system to facilitate increased lending.
The Central Bank of Kenya (CBK) has reaffirmed its dedication to ensuring that banks transfer the benefits of lower interest rates to borrowers. The CBK, to enforce compliance, has launched on-site inspections of banks to oversee the implementation of the Risk-Based Credit Pricing Model (RBCPM).
Recent amendments to the Banking Act stipulate that banks failing to adjust their lending rates in line with reduced funding costs will face regulatory sanctions, including daily fines of up to Sh100,000 per loan account found in violation and penalties reaching Sh20 million or three times the financial gain for non-compliant institutions.