NATIONAL BANK REVISES LENDING RATES IN LINE WITH CBK POLICY SHIFT

The National Bank of Kenya (NBK) has revised its loan pricing model, shifting from the traditional base rate to a new reference rate framework pegged to the interbank rate.
In a statement, the bank announced that all loans in Kenyan shillings will now be priced at a Reference Rate of 12.9% plus a borrower-specific risk premium, replacing the NBK Base Rate model previously in use.
The move aligns with recent guidelines by the Central Bank of Kenya (CBK), which has urged commercial banks to adopt risk-based pricing tied to the interbank lending rate to improve transparency and fairness in loan charges.
“NBK’s revised framework aims to reflect market conditions more accurately while accommodating individual borrower risk profiles,” the statement read.
The CBK has given banks a three-month deadline to submit their new pricing models for review and approval.
The shift comes after the CBK lowered its benchmark lending rate to 9.75% in June, marking its sixth consecutive cut, as it seeks to stimulate credit growth amid stable inflation.
However, lending rates among commercial banks have remained relatively high—averaging between 16.4% and 16.9%—prompting regulatory intervention.
Borrowers are expected to experience variable impacts depending on their risk ratings, with those deemed low-risk likely to enjoy more competitive rates under the new model.
NBK said it will gradually recalibrate existing loans to conform with the new structure.