It comes a good news that the central bank mind about the normal mwananchi. The introduction of the Kenya Banks’ Reference Rate (KBRR) comes a time when everyone has been crying about the high interest rates charged by banks. One then only waits to see if banks will pick the Que and lower their otherwise supper normal rates.
I have a suggestion for the government though , this is only if banks don't lower their rates. how about the government funding cooperatives and ask them to charge the lower rates.
The Central bank will issue a Circular to all banks to operationalize the KBRR as follows:-
1. The KBRR of 9.13 percent shall be effective from, 8th July, 2014, and will remain at this level until its next review in January 2015 (if market conditions do not drastically change).
2. All banks and mortgage finance companies will price their flexible rate loans using the KBRR as the base rate.
3. For individual banks, the interest rate they charge their customers will be KBRR + K. We expect banks and mortgage finance companies to vary their lending rates to be as close
as possible to the KBRR.
4. Banks and mortgage finance companies will disclose to their respective borrowers and the Central Bank the breakdown of any deviation, K, from the KBRR, thereby enhancing
transparency in pricing of credit and mortgages.
5. All flexible/variable credit facilities applied for shall be priced using the new KBRR framework.
6. Existing flexible/variable credit facilities shall be transitioned to the new KBRR framework by 30th June 2015
I have a suggestion for the government though , this is only if banks don't lower their rates. how about the government funding cooperatives and ask them to charge the lower rates.
The Central bank will issue a Circular to all banks to operationalize the KBRR as follows:-
1. The KBRR of 9.13 percent shall be effective from, 8th July, 2014, and will remain at this level until its next review in January 2015 (if market conditions do not drastically change).
2. All banks and mortgage finance companies will price their flexible rate loans using the KBRR as the base rate.
3. For individual banks, the interest rate they charge their customers will be KBRR + K. We expect banks and mortgage finance companies to vary their lending rates to be as close
as possible to the KBRR.
4. Banks and mortgage finance companies will disclose to their respective borrowers and the Central Bank the breakdown of any deviation, K, from the KBRR, thereby enhancing
transparency in pricing of credit and mortgages.
5. All flexible/variable credit facilities applied for shall be priced using the new KBRR framework.
6. Existing flexible/variable credit facilities shall be transitioned to the new KBRR framework by 30th June 2015
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