By Elijah Odhiambo
Cooperative Bank has achieved another first in Kenya’s banking sector after cutting interest rates charged on personal loans and asset financing in a move targeting select salaried borrowers such as civil servants who have a good repayment history.
The lender announced on Thursday that it had reduced the rate from 14 to 13 percent per year, beginning April 1. However, it did not disclose how many eligible clients were affected.
Co-op Bank said the cut was in response to improved loan repayment records and reduced default risk that the targeted check-off scheme loans have recorded over time.
“This reduction of the lending rate is our response to the good loan repayment record and reduced default risk that target check-off scheme loans have recorded over time,” Coop Bank said.
Salary check-off loans are credit facilities provided to individuals who are employed and use their salary as security for accessing loan facilities.
“It is a deserved reward for customers who have maintained a consistently good credit record,” the lender added.
The move shies away from the industry trend where majority of the lenders are revising their lending rates upwards, especially in light of the recent upward adjustment of CBR by a huge 75 basis points to 9.5 percent.
Qualifying customers
Qualifying customers have been receiving text messages to inform them about the development.
“Dear customer, You can now top-up your existing personal loan at a rate of 13 percent per month instead of 14 percent. Please apply at any Co-op Bank branch,” said Kenya’s third-largest bank in a notice.
Among the key beneficiaries of the new lower rates include;
- Key corporate and institutional employers including the Kenya Defence Forces and other armed services,
- The Kenya Police Service,
3.The Teachers Service Commission ,
4.Government Ministries,
- The National Assembly,
6.Key state corporations such as KRA and KenGen
Coop Bank home loan services
The lowering of the loan charges come in the wake of a move by the lender to offer home loan services at a reduced balance terms and interest rates of just 9.9 percent.
The mortgage program intends to give people with incomes up to Ksh150,000 per month access to affordable homes.
The plan is 3 percentage points less expensive than Kenya’s average mortgage rate, which the CBK estimates to be 12.9 percentage points.
Without providing a timeframe, Co-op Bank stated that it was trying to expand the decreased interest rates to cover all borrowers with solid credit histories in addition to the present target customer segments.
How to apply for the loan
Customers have been encouraged to take advantage of the low loan pricing rate for personal loans and asset financing by applying at any Coop Bank Branch.
