According to the data, Middle East bank report an average charge of 24.6% on loans advanced by the institution followed by K-Rep at 24.2%. The cheapest bank to borrow from is the Mortgage lender, Housing Finance Corporation with an average rate of 15.2 per cent. Others lending at lower rate included Chase bank, Family bank and Citi group asking a return of 15.5 per cent on their money.
CBK however added that the published rates were just average of what each bank was charging before inclusion of other charges. Thus the actual cost of acquiring a loan, CBK said, would be higher after adding administrative fees, processing fees, valuation fees, legal fees and commitment fees, among others. Therefore the effective rates charged by individual banks may be higher than these published interest rates depending on the other fees and charges levied on loan products by the specific bank.
The move to regularly publish bank rates, is seen as a move by the regulator to raid on bank's overcharging clients by capitalizing on secrecy. The clients should also play their role in seeking information before deciding on the bank to borrow from. Besides the offer rate, a customer of a bank is charged a certain rate depending on their ability to negotiate. Thus actual rates are based on negotiations between the bank and the borrowing customers.
The regulator has been in the recent past been keen on muzzling the exploitative lenders in an effort to curb high cost in acquiring credit.
In its introductory note, the regulator, said "Publication of average lending rates for commercial banks is expected to increase transparency and
enable the borrowing public to making informed borrowing decisions."
Other efforts to bring the credit pricing under control include introduction of the Kenya Bankers Reference Rate (KBRR) to guide lenders on the rate they can impose on a loan.