Family Bank has revised its base lending rate downwards from 15.95% to 14.95%, following the revision of the Central Bank Rate (CBR) by the Central Bank of Kenya (CBK).
In a notice to customers, the bank stated that the revised rate will take effect from May 25, 2025, for new loans.
However, the lending rates will take effect from June 15, 2025, for existing loans.
The final lending rate for each customer will be determined based on their individual credit risk profile, with the bank applying a risk-based margin atop the newly set base rate.
“Following the revision of the Central Bank Rate (CBR), we wish to inform our customers that we shall adjust our Family Bank Base Lending Rate downwards by 100 basis points from 15.95% to 14.95%.
“The effective lending rate will be the Family Bank Base Lending rate plus a margin based on the customer’s credit risk profile,” stated the bank.
Also Read: CBK Clarifies Interest Rate Caps in New Loan Pricing Model
Impact on Family Bank Customers
CBK revised the benchmark lending to ease economic pressure for businesses and households across the country.
The CBR is a key monetary policy tool used by the Central Bank to control inflation, stabilize the currency, and foster economic growth.
Lowering the base lending rate means customers will enjoy lower monthly repayments and improved access to new loans.
Moreover, for Small and Medium Enterprises (SMEs), this could mean better cash flow and growth.
“We shall continue to assess the market and advise accordingly in case of any further changes,” the bank added.
Also Read: From Being Denied Promotion to Founding Family Bank; Story of TK Muya
CBK Risk-Based Credit Pricing Model
The Central Bank of Kenya (CBK) on April 23, announced that it was scrapping the Risk-Based Credit Pricing Model (RBCPM).
Further CBK explained that the model encouraged unclear pricing mechanisms that resulted in high credit costs and reduced lending to the private sector.
It also announced the implementation of a series of changes, including narrowing the interest rate corridor around the Central Bank Rate (CBR) from 150 basis points to 75 basis points.
“This has continued to enhance the stability of the interbank rate and aligned it closer to the CBR,” CBK indicated in a statement.
Additionally, CBK adjusted the applicable interest rate on the Discount Window, the interest charged to banks for overnight borrowing, from the previous 300 basis points to 75 basis points, which is the upper bound of the interest rate corridor.
This move is expected to make short-term borrowing by banks more affordable and predictable, with potential trickle-down benefits for borrowers.
Follow our WhatsApp Channel and join our WhatsApp Group for real-time news updates
