Access Bank Kenya, ABC Bank, DIB Bank, Kingdom Bank, and Guardian Bank have continued to raise their loan rates above the Central Bank of Kenya’s (CBK) benchmark, despite warnings from the regulator about potential penalties.
Access Bank tops with the highest average interest rate, increasing its weighted average lending rate to 20.5% in March 2025, up from 20.39% in February.
ABC Bank followed with a rise to 17.54% from 17.42%, DIB Bank moved up to 17.07% from 16.58%, Kingdom Bank increased to 14.42% from 14.28%, while Guardian Bank raised its rate to 13.94% from 13.68%, according to CBK data.
These increases violate the CBK’s directive requiring commercial banks to use the Central Bank Rate (CBR) as the base for pricing loans, along with a lending premium known as ‘K’.
Earlier this year, the CBK warned it would start imposing daily penalties on banks that failed to comply with its credit pricing model from June.
Following resistance from several banks, the regulator began on-site inspections in February. In April, CBK Governor Kamau Thugge revealed that 13 of the 38 licensed commercial banks had already been inspected. Any penalties will be applied after inspections conclude at the end of June.
The issues originate from the CBK’s introduction of a new loan pricing model designed to protect borrowers and improve market transparency. However, commercial banks have objected, warning that the model could lead to the unintended consequences of past interest rate caps and hinder credit access in an already tight lending environment.
