22 banks get approval for risk-based loan pricing

22 banks get approval for risk-based loan pricing

Twenty-two out of 38 commercial banks have received approvals from the Central Bank of Kenya (CBK) to implement risk-based pricing.

This is according to data shared to Citizen Digital by the Kenya Bankers Association (KBA).

The banking sector lobby was nevertheless yet to share the list of the 22 banks before the publishing of this article.

The approvals nevertheless cover mid and low-tier lenders with only Equity Group and Absa Bank Kenya receiving the regulatory nod among big banks.

The lengthy delays to the approval of banks' risk-based pricing models has been attributed to the ‘case by case’ consideration of the models by the CBK.

Sources however indicate the CBK is set to accelerate the rate of approvals following the end of the electioneering period.

Among banks expectant of approvals in the near term include KCB Group and Stanbic Bank Kenya.

Despite receiving the nod for risk-based pricing, most lenders are yet to implement the model on a bearish economic outlook.

Equity Group which for instance priced its most costly loan at 13 per cent in six months to June says the current difficult economic environment has seen the lender pause effecting the risk-based pricing formula to loans and advances to customers.

KCB Group which awaits the regulatory nod has meanwhile stated that it sees risk-based pricing being applied to new and not existing customer loans.

The implementation of risk-based pricing was born out of the 2019 Banking Sector Charter which envisions transparency and customer centricity in the pricing of credit.

Banks have no deadline to have their risk-based pricing models approved.

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Central Bank of Kenya (CBK) banks risk based pricing

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