Lending rate cap pushes drive to mobile banking to cut costs, grow

Kenyan banks are focusing on mobile banking to lower costs and build new revenue streams after the government capped commercial lending rates, but they face several years of work to recover from the hit to profitability, bankers and analysts said.

The cap imposed last month limited commercial rates to 400 basis points above the central bank's main rate, now 10 percent. Banks previously charged 18-20 percent or more on loans, helping create some of the most profitable institutions in Africa.