The Kenya Commercial Bank (KCB) has announced that it will adopt a new loan pricing system effective December 1, 2025.
In a notice on Wednesday, November 26, KCB said the move follows the Central Bank of Kenya’s (CBK) directive to commercial banks to implement the revised Risk-Based Credit Pricing Model (RBCPM), aimed at increasing loan pricing transparency.
“Subsequent to the issuance of revised Risk-Based Credit Pricing Model (RBCPM) by the Central Bank of Kenya (CBK), KCB Bank Kenya wishes to inform customers and the general public that we will be transitioning to the new framework from December 1, 2025,” the notice reads in part.
The lender added that all new local currency variable-rate loans taken from December 1, 2025 will be subjected to the new pricing model.
According to the notice, under the new framework, lending rates for new variable-rate loans will be based on the Central Bank Rate (CBR) plus a customer-specific risk-based premium referred to as “K”.
Existing local currency variable-rate loans will continue under the current terms and will transition to the new framework by February 28, 2026.
“All applicable fees, charges and the total cost of credit will be fully disclosed to customers in line with the CBK requirements,” KCB stated.
KCB becomes the first lender to shift to this framework. CBK had in August given commercial banks 3 months to implement the new pricing model for new loans to strengthen the transmission of monetary policy and foster a more transparent, market-responsive pricing model.
Under the new framework, banks will use a new market-based benchmark known as Kenya Shilling Overnight Interbank Average Rate (KESONIA) as the reference point for pricing all variable-rate loans denominated in Kenya Shillings, marking a significant departure from the initial CBR.
The total lending rate will now be calculated as KESONIA + Premium (“K”). “Premium” will include costs related to lending, return to shareholders and the risk profile of the borrower. The total cost of credit to the consumer will be this rate plus.
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