In compliance with the Central Bank of Kenya guidelines, Equity Bank has lowered the interest rate charged on loans to a maximum of 13 percent p. a with effect from Wednesday, 1 August 2018 to reflect the new Central Bank Rate (CBR) of 9 percent.
This move comes a few days after CBK announced the drop in rates. It is a welcome relief to Equity Bank customers as it will apply to new and existing loans, including group loans, microfinance loans, and mobile loans as well as credit cards.
Equity Bank has consistently aligned its interest rates to the CBR in a bid to provide affordable and convenient financial solutions to its customers. The Bank slashed its lending rates to 13.5 percent in March 2018, and before that to 14 percent in September 2016, after the interest capping law came into effect on 14th of the same month.
The minimum interest on saving deposits at Equity Bank has also been capped at 6.3 percent which follows the stipulation of the Monetary Policy Committee (MPC) to pay interest at 70 percent of CBR.
While announcing the reduction in interest rates, Equity Group CEO and Managing Director Dr. James Mwangi said he was positive that this move will result in economic growth, which will create significant opportunities and employment for the youth.
“It is now anticipated that the affordable interest rates will stimulate private sector borrowing, thus enhancing the economic growth rate,” he said.
The new revised rates are in compliance with the interest capping law that requires commercial banks and mortgage finance companies to lower lending rates to 13 percent from 13.5 percent. The law allows an interest margin of only 4 percentage points above the CBR. In the latest review, the MPC cut the base lending rate by 50 basis points to 9 percent down from 9.5 percent.