Kenyan banks are offering good borrowers nearly three times the amount they were being offered prior to the capping of interest rates.
According to a new report by Creditinfo credit bureau, the average size of loans issued by commercial banks and micro-finance institutions nearly tripled from Sh. 235,000 to about Sh. 665,000 after the interest rates law came into effect.
“Banks stopped giving lower ticket loans and then for the people who were borrowing, they started seeking top-ups or refinancing. Any new facility that was being given was focusing on high-value loans,” said Kamau Kunyiha, Creditinfo chief executive officer.
However, towards the end of quarter four though, the rush fizzled out as reflected in the Central Bank of Kenya data, which shows private sector credit growth fell to 4.3 per cent in December 2016 compared to more than 17 per cent a year earlier.
“The value of average loans has increased considerably to reflect this. This may be a boost for commerce as SMEs now access credit to grow the business and expand,” said Mr Kunyiha.
