Central Bank of Kenya and bankers plan to reduce cost of credit

While new tools for calculating cost of loans from banks are in place, customers are yet to experience any significant drops in interest rates. Banks still load numerous charges on the price of loans to their customers, making cost of credit still expensive.

The banking industry has been working with the Central Bank of Kenya (CBK) to reduce some of these costs.

"The Kenya Bankers Association in partnership with Central Bank and the Treasury are working on reforms and strategies that can reduce the cost of external charges. There are several initiatives at the concept stage, including creating a digital movable assets registry and a securities (collateral) depository," said Dhiren Rana, Managing Director of the Middle East Bank Kenya Limited.

The depository will allow transfer of securities from one institution to another without having to discharge and charge securities again, more like the transfer of shares at the Central Depository and Settlement Corporation (CDSC).

"It will eliminate high legal costs and also considerably reduce the time for transferring securities," said Rana. He made the remarks during a CEO online chat session organised by the Kenya Bankers Association (KBA).

KBA and the Kenya Association of Manufacturers have also been lobbying for several years to the Chief Justice concerning need to lower the tariff under the Advocates Remuneration Act.