The Central Bank of Kenya.
Commercial banks have begun revising lending rates and shifting pricing of loans to the new risk-based pricing framework ahead of the February 28 deadline, with the changes coming after the Central Bank of Kenya’s latest cut of the benchmark rate to 8.75 per cent.
Notices issued this week by NCBA Bank Kenya, KCB Bank Kenya, Equity Bank Kenya and Family Bank show lenders adjusting their base rates in line with the revised Central Bank Rate (CBR), while setting timelines for migrating older facilities to the common pricing framework.
The moves follows the Monetary Policy Committee’s decision on Tuesday to lower the CBR by 25 basis points from nine per cent, being the 10th straight cut since August 2024. Citing stable inflation, a steady shilling and improving asset quality in banking sector, the CBK said the cut was aimed at strengthening the transmission of monetary policy, as well as supporting private sector credit growth, which remains below historical averages.
Under the new loan-pricing framework that came into force on December 1, 2025 for new facilities, all Kenya shilling variable-rate loans are priced using the CBR as a common base, with a customer-specific premium added to reflect individual risk profiles.
The model replaced bank-specific reference rates that had drawn criticism from borrowers over opacity and weak responsiveness to policy changes.
In its notice on Friday, NCBA said all new Kenya shilling variable-rate facilities booked from February 12 will apply a base rate of 8.75 per cent, while loans issued from December 1, 2025 under the risk-based credit pricing model will be repriced to reflect the new CBR with effect from March 12.
Central Bank of Kenya (CBK) Governor Kamau Thugge.
Family Bank also announced that new variable-rate loans will be priced at the revised CBR plus a premium, while existing loans issued from December 2025 will be updated to the new reference rate with immediate effect.
KCB’s all new local-currency variable-rate loans will now be priced at a base rate of 8.75 per cent, with the final lending rate determined by a customer-specific margin. Existing loans priced on the CBR will have the benchmark component adjusted to the new rate within 30 days from February 11.
For Equity Bank, new shilling-denominated variable-rate loans will be priced at the prevailing CBR plus a premium, while existing loans already priced on CBR plus margin will see the benchmark component adjust from nine per cent to 8.75 per cent in 30 days.
The coordinated repricing reflects growing regulatory pressure on lenders to align loan pricing with the easing monetary policy cycle.
The CBK has repeatedly warned banks against delaying passing through rate cuts, arguing that weak transmission has blunted the intended impact of monetary easing on economic activity.
During the year to January 2025, lending grew marginally to 6.4 percent, having stood at 6.3 percent in the same period to last November.
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