Co-operative Bank assures won’t hike interest rates on existing loans
Co-operative Bank has assured its customers that it will retain interest rates on outstanding loans even after the repeal of the rate cap and subsequent assent of the bill into law.
“We are pleased to advise all our customers that Co-op Bank is retaining existing interest rates for all our outstanding loans based on existing money market conditions,” said Co-op Bank group managing director and chief executive Gideon Muriuki in a statement.
The move follows an earlier notification by some lenders that they would make changes on interest rates.
On November 8, Sidian Bank chief executive Chege Thumbi issued a circular to employees saying: “Following the signing of the Finance Bill into law by the President, the bank has reviewed interest rates for various products based on the associated credit risk. The pricing of existing loans will be communicated in due course.”
According to the memo, corporate loans would attract an interest of 16 per cent, small and medium enterprises (17 per cent), consumer (19 per cent), micro and unsecured loans (19 per cent), credit (19 per cent) and mobile (19 per cent).
However, in an advert in a section of the media, Sidian Bank Board chairman James Mworia refuted the memo saying: “The Board of Directors and management of Sidian Bank Ltd regret the unfortunate issuance of a statement that it had reviewed and increased interest rate following the repeal of Section 33B of the Banking Act.”
This comes as Gatundu Member of Parliament Moses Kuria, revealed that Parliament would form a select committee to audit Kenya’s economic management as well as interest rates by banks and other financial institutions.
According to Kuria, if banks “continue to misbehave”, he will reintroduce the capping of interests after six months, in line with parliamentary standing orders.
“If the banks...misbehave and go above the four per cent above the CBK rate, I will reintroduce this amendment. The interest rates must remain at three to four per cent,” Kuria was reported to have told one of the dailies.
Earlier on Co-op Bank and CFAO Kenya Ltd had signed a deal that enables farmers and cooperative societies to easily acquire farm machinery and the equipment they need..