Big banks yet to lower interest rates

Large commercial banks are yet to lower their interest rates even after six mid-tier lenders yield to public pressure to lower the current lending rates on loans.

Chase Bank (in receivership) and HFC joined the Bank of Baroda, National Bank, Family Bank and Commercial Bank of Africa (CBA) in lowering interest rates in a move that seeks to protect lenders from exorbitant lending rates.

In a notice in the dailies, HFC and Chase Bank told customers of intentions to lower interest rates from August 25.

The move is a reaction to the Central Bank of Kenya’s monetary policy committee decision to slush the Kenya banks reference rate to 8.9 percent.

Banks in the tier 1 category in Kenya include Kenya Commercial Bank, Equity Bank, Co-operative Bank, Standard Chartered, Barclays and Stanbic Bank and control 49.9 percent of the market.

Last week, bank chief executives signed a memorandum of understanding presented to the Central Bank of Kenya (CBK) offering alternative solutions to capping of interest rates by legislation.

Among the seven points proposal present, was the immediate transmission of CBK policy decisions.

Rafiki Microfinance Bank, a subsidiary of Chase Bank, also wrote to its customers proposing to lower interest rates.

“Dear customers, effective 1^st September 2016, we will be reducing interest rates on loans priced within the KBRR framework in line with the 0.97 percent reduction of KBRR by the Central Bank of Kenya,” Rafiki told its clients via SMS.

Members of parliament led by Kiambu MP Jude Njomo have however termed the move as a dishonest move by banks to dissuade the president from signing the interest rate bill.

Speaker of the national assembly Justin Muturi was expected to present the bill to President Uhuru Kenyatta on Monday, who will then have 14 days to decide whether to sign into law are call for further amendments.

If signed into law banks will charge a maximum of 14.5 percent on interest rates pegged on the current central bank rate of 10.5 percent.