By James Anyanzwa
Central Bank has hit out at banks for not passing the benefits of reduced banking cost to the customers.
At the same time the banking regulator has ordered commercial banks to display the earnings from all the projects they finance in order to provide a comparative platform with the cost of credit.
Governor Njuguna Ndung’u noted that although significant efforts have been employed in bringing down the cost of doing business, commercial banks are yet to replicate the same to their customers.
“Kenyans continue to decry the high cost of banking services and it is paramount that as a Government and industry, we expend due efforts towards addressing these concerns,” he said. Prof Ndung’u singled out various initiatives such as introduction of agency banking, credit information sharing, currency centres, cheque truncation project and mobile phone transfer platform, saying these programmes have gone along way in reducing the cost of banking services but borrowers are yet to reap the full benefits.
“It is anticipated that the cost benefits of these initiatives, among others, will translate to lower costs of banking services in the short to medium term horizon,” he said. Ndung’u was speaking during the official opening of the first annual Kenya Bankers Association (KBA) research conference in Nairobi yesterday.
Ndung’u blamed structural bottlenecks for the high cost of banking services and doing business and the sustained high interest rate spreads (Difference between lending rates and deposit rates), which currently stands at an average of 15 per cent.
Increased banking costs have over the years been cited as one of the main obstacles to financial inclusion.