CBK approves new risk-based credit pricing model

The Central Bank of Kenya has yielded to pressure from financial institutions to have the interbank rate as the operating rate for loans, formally adopting the revised risk-based credit pricing model, which will now be anchored on the overnight interbank average rate. It will now be renamed the Kenya shilling overnight interbank average, to align it with the international best practice, dropping the use of the bi-monthly central bank rate. The move has been welcomed by the banks' umbrella body, noting that it will be key in ensuring faster translation of monetary decisions and enhancing transparency in the credit market.