Equity Bank has adjusted interest rates to 14.5 per cent p.a taking cognizance of the base rate set and published by the Central Bank of Kenya. CBK said that the reference rate will be the CBK rate which is currently set at 10.5 per cent.
At the same time, interest on deposits held in local currency interest earning accounts will earn interest at a minimum of 7.35 percent being 70 percent.
Equity Bank CEO Dr. James Mwangi said, the new rates will be applied on a reducing balance basis.
It will apply to all local currency new credit facilities and existing ones whose performance is on schedule. We invite our customers to visit their respective branches in case they require more information or clarification on their credit facilities.
The Banking (Amendment) Act 2016 section 33(1) (a) says “ the maximum interest rate chargeable for a credit facility in Kenya at no more than four percent, the base rate set and published by the Central Bank of Kenya….”
Equity Bank has interpreted “credit facility” to mean any form of financial accommodation extended to a customer through institutions licensed by the Central Bank under the Banking Act irrespective of the various channels. The desire to provide ceilings is a clearly discernible intent of the law as evidenced by the Memorandum of Objects and Reasons to The Banking Act (Amendment) Bill, 2015. The Act further prohibits any person from entering into an agreement/arrangement to borrow or lend directly or indirectly at an interest not accordance with the Act.
This means that for the bank, the benefit to customers includes loans through mobile phones or through other third party platforms or collaborations with Mobile Network Operators (MNOs), credit card facilities as well as micro finance loans.
Equity Bank has said it will further continue to support its customers with Financial Education and Entrepreneurship training as well as with products and solutions such as Insurance that will enhance the protection of their assets.