NAIROBI, Kenya, April 23 – The Central Bank of Kenya (CBK) has issued a consultative paper seeking public input on the proposed review of the Risk-Based Credit Pricing Model (RBCPM), introduced in 2019 to address high lending rates and lack of transparency in the credit market.
The review comes five years after the model’s introduction, as CBK reassesses its effectiveness in supporting ongoing reforms in the banking sector.
The regulator now proposes the use of the Central Bank Rate (CBR) as the common reference rate for pricing loans.
Under the proposed changes, lending rates will be calculated by adding a premium—referred to as “K”—to the CBR, which reflects banks’ cost of funds.
To improve transparency, CBK will publish each bank’s “K” component on its website, the Total Cost of Credit (TCC) platform, and in two national newspapers.
The CBK said the move aims to create a market-driven, fair, and transparent credit pricing framework, enabling borrowers to better compare loan costs across banks.
The public and stakeholders are invited to submit their feedback on the consultative paper, which is part of CBK’s wider strategy to enhance financial inclusion and market discipline in the lending industry.
