For a long time, Kenyans had complained about the high interest rates that were being charged by banks. This led to the introduction of the rate caps in September 2016 as a means of stopping the exploitation of Kenyans by the banks.

However, this move had its winners and losers, the winners in this case were the individuals who had taken loans at high interest rates and now got to enjoy the low rates. The losers were Micro Small and Medium Size enterprises which quickly found out that they could no longer access loans due to their high risk profile and had to contend with getting loans from shylocks at exorbitant rates.

The question on everyone’s mind is whether the banks will go back to charging high interest rates. As an answer to this, the Central Bank of Kenya (CBK) has set out to define a clear vision of the banking sector that is responsible, disciplined and aligned to customers needs. Towards this they have come up with four pillars that is; risk-based credit pricing, transparency, customer centricity, and entrenching an ethical culture in banks.


According to the CBK, loans should be priced based on the customer’s risk profile and all positive and negative information from Credit Reference Bureaus (CRBs). The Credit Information Sharing (CIS) mechanism has also been improved and work is ongoing to enhance it further, that is increasing the sources of information, enhancing the frequency and integrity of the data reported to CRBs, and training of bank staff.


Banks are expected to fully disclose the pricing that is all charges and fees of their products. To this end, the Cost of Credit website and a mobile app that enable customers to “window shop” for personal loans and mortgages was launched in 2017. However, further improvements are needed to incorporate more products and improve the overall customer experience.

Customer Centricity

Banks need to be aligned to the needs of their customers, including tailoring products that best serve customers’ needs and swiftly resolving customers’ complaints.

Ethical Culture

Customers perceive the high profitability of banks as exploitative given the high cost of credit. As such, banks should place greater emphasis on longer-term environmental, social, and governance issues. In this regard, CBK has compelled banks to review their business models and has over the last three years impressed on bank shareholders to accept lower return that takes into account the long-term needs of their customers and the economy.

To achieve this vision, in February 2019, CBK issued the Kenya Banking Sector Charter. The Charter represents a commitment from banks to entrench a responsible and disciplined banking sector, cognizant of, and responsive to, the needs of their customers. By end May 2019, all banks had submitted to CBK their time-bound plans approved by their boards, to comply with the Charter on the four pillars. CBK is now monitoring implementation of the Charter by each bank. More recently, CBK has also secured commitments from the banks that they will act responsibly, particularly on the pricing of credit now that the interest rate caps have been repealed.