Kenya to scrap risk-based loan pricing in push for lower interest rates
- CBK proposes to scrap the risk-based credit pricing model.
- Lending rates will now be pegged to the Central Bank Rate (CBR).
- The decision follows frustrations over banks maintaining high lending rates despite CBR cuts.
The proposed shift by the CBK represents a crucial step towards making credit more accessible and affordable for a broader segment of the population. However, the success of this initiative will largely depend on the banks' willingness to adopt the new model and the effectiveness of the CBK in enforcing transparency in lending practices. Ongoing monitoring and evaluation will be essential to ensure that the intended benefits are realized, particularly for underserved borrowers.
