Co-operative Bank has once again become the first bank in the country to cut down the cost of its loans.

Currently any new loans at Co-op Bank are being taken at a discounted rate of 13.5 per cent. Interestingly, this new rate affects old loans, which means that they are being reviewed and rated at 13.5 per cent.

Co-op Bank said interest on existing customer deposits will also be immediately payable at the new rate of 6.65 per cent, down from seven per cent.

Existing loans will move to the new rate within the 30-day period allowed by consumer protection laws.

This slashing of the cost follows the decision by Central Bank of Kenya to cut the benchmark rate by 0.5 per cent.

The MPC said Monday’s decision to fix the benchmark rate at 9.5 per cent was informed by the need to support economic activity in the changing business environment.

Co-op Bank loans have been among the cheapest and easiest to access in Kenya over the past two years that the interest rates capping law has been in effect.

Following the signing into law of the Banking Amendment Bill 2015 which capped interest rates at 14.5 per cent, the bank was the first to start issuing loans at 14 per cent. In the same vein, it was the first to adjust old loans to the new regime.

“In order to give our existing customers the full benefit of the new law, this interest rate pricing guideline will also apply to all our existing credit facilities,” Co-op Bank managing director Gideon Muriuki told managers in a circular.

This had come way before the CBK had issued full guidelines on how the pricing of loans would work in the new regime.