The Equity bank of Kenya has become the first bank to revise and implement high lending rates upwards due to the directive by Central Bank of Kenya.
Through a notice released to the public, Equity confirmed that the Equity Bank’s Reference Rate (EBRR) will be increased by 2.87% in the bank policy to incline with the CBK policy.
“Following the adjustment of the Central Bank Rate from 10.5% to 12.5%, Equity Bank… shall, effective 11th December 2023, adjust Equity Bank’s Reference Rate (EBRR) from the current 14.69% to 17.56%.”
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According to the bank notice, the move has been impacted by various factors in the market including both local and international that have continuously taken an effect on the shilling. The move is to ensure that the shilling doesn’t depreciate further.
“Consequently, the final interest rate shall be Equity Bank’s Reference Rate at 17.56% plus a margin, currently at 8.5% per annum. This shall apply to the new Kenya Shilling dominated credit facilities.”
However, the bank has assured their customers that they will continue to monitor and assess the market and advise further incase of any changes that are to be made.
This comes after the Central Bank of Kenya (CBK) announced an increase in the new high lending rates from the current 10.5% to 12.5% a huge increase in the past 10 years.
However, the Kenya Bankers Association raised concerns over Non Performing Loans (defaulters) which are set to increase due to the new directive, fearing an instability in the market.
“A further rate hike to tame potential inflationary pressures if fully implemented by banks will further escalate credit risks in the market and build up in non perfoming loans (defaulters) which will therefore affect the industry’s stability.”
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