The Central Bank of Kenya has issued a consultative paper seeking public comments on a review of the Risk-Based Credit Pricing Model (RBCPM), including a proposal to use the policy rate, the Central Bank Rate (CBR), as the common reference rate for determining lending rates in the Kenyan banking sector. Under the proposal, banks’ lending rates would be set as the CBR plus a lending rate premium ("K"). The premium is intended to reflect bank-specific factors, and CBK would publish the components of each bank’s "K" on its website, the Total Cost of Credit website, and in two newspapers of nationwide circulation. The consultative paper frames the review as a reassessment of the RBCPM introduced in 2019 to address high lending rates and opaque pricing mechanisms. Stakeholders are invited to submit comments by May 2, 2025.
Central Bank of Kenya 2025-04-23
Central Bank of Kenya launches consultation on revising risk-based credit pricing to anchor bank lending rates to the Central Bank Rate
The Central Bank of Kenya proposes using the Central Bank Rate (CBR) as the reference for lending rates. The proposal includes setting rates as the CBR plus a bank-specific premium, with components published publicly. This review reassesses the Risk-Based Credit Pricing Model introduced in 2019 to address high lending rates and opaque pricing.