The revelation that some top lenders are yet to adjust charges on customer loans, two months after the Central Bank of Kenya (CBK) lowered its benchmark rate, raises questions on the ethical culture of business.
Market enquiries indicate that some key banks are still charging 13 percent on customer loans despite the Central Bank Rate (CBR) having been cut from nine to 8.5 percent in November and further lowered to 8.25 percent following a meeting of the Monetary Policy Committee (MPC) on Monday.
In the spirit on the repealed Section 33B of the Banking Act, these cuts on the CBR should translate to some relief on the cost of borrowing.
Unfortunately, whilst some lenders lowered their charges on loans, others have stuck to the old higher terms — effectively denying borrowers the respite they deserve and need to boost their liquidity or shorten their loan repayment periods.
This doesn’t augur well for the image and long-term outlook of banks.
By delaying to lower interest charges, banks risk losing their customers who are already feeling the pinch of toughening economic conditions.
It would be strategic for the banks to accept lower returns, which take into account the long term needs of their customers as well as the economy to foster shared prosperity.
This helps to build a relationship with customers which is vital for the long-term survival of a business.
Business requires vision and long-term planning and strategy and this is the stance bank should adopt with their customers.
Similarly, customers should constantly keep an eye on product prices in the market and call out banks who fail to adjust their rates accordingly.
The Cost of Credit online portal offers a perfect platform for customers to monitor product prices and make informed borrowing choices.