Kenyan banks to display loan charges
The Central Bank has fixed the inaugural reference interest rate on commercial bank loans at 9.13 per cent.The Central Bank has fixed the inaugural reference interest rate on commercial bank loans at 9.13 per cent.
"This level of the KBRR (Kenya Bank's Reference Rate) is effective from July 8, 2014 until its next review in January 2015," CBK governor Njuguna Ndung'u told newspaper The Star, adding that only drastic changes of macroeconomic fundamentals could dictate otherwise.
This means commercial banks will have to notify the borrower of charges above that rate for the next six months.
The overheads will be disclosed under
annual percentage rate (APR) pricing mechanism that became effective this month, which will enable consumers to compare different bank loan costs based on standardised parameters and a common computation model.
Treasury Secretary Henry Rotich said the actual interest rates will be determined by market forces as shaped by key macroeconomic fundamentals including inflation and exchange rates.
The APR was initiated by the Kenya Bankers Association (KBA) in collaboration with the Central Bank of Kenya.
KBA's CEO Habil Olaka told Nairobi Business Monthly last month: "As an industry, we are enhancing pricing disclosures to enable bank customers to make more informed choices. This is one of the mechanisms embraced by banks to address issues relating to easing access to credit."