Loan repayment history is key to affordable bank credit, GTBank boss says

GTBank Kenya Managing Director Jubril Adeniji during the My Chat with a Bank CEO session. [Courtesy] Borrowers with strong repayment records will soon enjoy cheaper loans and better access to credit under Kenya's new loan pricing formula, GTBank Kenya Managing Director Jubril Adeniji says. Mr Adeniji said under the new framework enables banks to evaluate borrowers on an individual basis, rewarding good repayment behavior with lower interest rates and, in some cases, eliminating the need for collateral. During the latest session of 'My Chat with a Bank CEO', an initiative by the banking industry umbrella body Kenya Bankers Association (KBA), Mr Adeniji said the most important C of credit is Character, and that is tied to how one repaid a loan before. "Your credit history is the most important criterion a financial institution will consider when providing a loan," he said, adding, "Transparent engagement between borrowers and banks is vital, encouraging customers to communicate early when facing repayment challenges." The Kenya Shilling Overnight Interbank Average (KESONIA) model represents a major shift toward risk-based loan pricing to promote fairness and financial inclusion. It enables banks to evaluate risk more accurately, creating opportunities for MSMEs, youth, and women-led enterprises to access affordable financing. Under the model, Mr Adeniji said lending rates are pegged to the average overnight interbank rate-the rate at which banks lend to one another -with an additional margin based on each borrower's credit risk. "This approach encourages responsible borrowing and repayment discipline, aligning loan pricing more closely with individual risk profiles rather than blanket interest rate caps or uniform pricing," he said. His sentiments are echoed by market observers who argue the transition to KESONIA marks a significant evolution in Kenya's credit ecosystem, offering both opportunities and challenges. For consumers, the model promises greater transparency and fairness, as borrowers with good repayment records can access cheaper credit. "For banks, it provides a framework to better manage lending risks while expanding access to previously underserved market segments," said Mr Adeniji. Analysts also note that KESONIA is expected to stimulate competition among lenders, with institutions differentiating themselves through innovative risk-assessment tools and digital credit-scoring models. This could lead to more personalized lending experiences, particularly for small businesses and informal sector players who have traditionally struggled to demonstrate creditworthiness. For Kenya's growing MSME sector, which accounts for over 80 per cent of employment and a substantial share of GDP, the implications are particularly significant. Access to affordable financing has long been cited as a major barrier to growth. With the implementation of KESONIA, small enterprises that demonstrate consistent repayment behavior stand to benefit from lower interest rates and improved credit terms, boosting their ability to invest and expand. The My Chat with a Bank CEO series provides an interactive platform where bank leaders engage directly with customers on key banking topics. The October-November 2025 edition will feature six CEOs discussing how the industry is leveraging the KESONIA framework to empower businesses and households across Kenya. Visit My Chat with a Bank CEO for registration.

Loan repayment history is key to affordable bank credit, GTBank boss says

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Loan repayment history is key to affordable bank credit, GTBank boss says

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