The Lower Eastern Times Opening The Third Eye
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The Central Bank of Kenya (CBK) has released a consultative paper inviting public views on proposed changes to the Risk-Based Credit Pricing Model (RBCPM), first introduced in 2019 to tackle high interest rates and increase transparency in lending.
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Five years on, CBK is reassessing the model’s impact and is now proposing a key shift: using the Central Bank Rate (CBR) as the standard reference point for loan pricing.
According to the new proposal, banks would add a premium—referred to as “K”—to the CBR to determine lending rates. This premium reflects each bank’s cost of funds.
To promote openness, CBK plans to make each bank’s “K” value publicly available on its website, the Total Cost of Credit (TCC) platform, and in two national newspapers. The goal is to help borrowers easily compare credit costs across financial institutions.
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The move is part of CBK’s broader effort to support financial sector reforms, enhance financial inclusion, and strengthen market discipline. Members of the public and stakeholders are encouraged to submit their feedback on the proposals.
