Industrial and Commercial Development Corporation (ICDC) has announced a three percentage point reduction in loan interest.
The State-owned ICDC said on Monday that it has, from November 1, been charging interest on loans at 13 per cent, down from 16 per cent, which is one percentage point below the commercial bank maximum lending rate.
“Our rates and terms of lending have been modest in the industry. The average bank lending rates have been 18.3 per cent before the commencement of the new law while ICDC has been lending at an average of 16 per cent,” said ICDC acting executive director Kennedy Wanderi.
‘‘With the decrease in the cost of borrowing, the uptake of loans across the economy is expected to go up thereby stimulating economic growth,” said Mr Wanderi. The rate capping law sets the maximum lending rate at four percentage points above the Central Bank Rate (CBR). The law also sets the minimum returns payable by banks on customer deposits at 70 per cent of the CBR.
The CBR is currently set at 10 per cent, meaning that banks are barred from charging interest on loans above 14 per cent.