The Kenya Bankers Association (KBA) has issued a new directive to loan defaulters following the new revised risk-based credit pricing model by the Central Bank of Kenya (CBK).
The Bankers Association, in a statement on Wednesday, September 4, 2025, announced to the public that if they borrow loans and default, they will still be able to get loans; however, at a higher interest rate compared to the rest of the abiding customers.
At the time, the Kenya Bankers Association urged Kenyans to keep a good loan repayment record that will help them get cheaper loans.
“If you borrow and default, you will still be able to get loans, but at a higher interest rate because of the risk from your past borrowing history. This means keeping a good loan repayment record will help you get cheaper loans,” KBA wrote.
The review follows KBA’s endorsement of the Central Bank’s revised risk-based credit pricing model, a new reference in determining the interest rates on loans issued by commercial banks.
Bankers endorse CBK’s pricing model
The bankers say the change will facilitate greater access to bank credit for both individuals and businesses, enhancing the banking sector’s capacity to support Kenya’s economic growth.
“The banking industry welcomes the revised loan pricing formula for variable interest rates, announced by the Central Bank of Kenya (CBK) on August 26, 2025. The change will facilitate greater access to bank credit for both individuals and businesses, enhancing the banking sector’s capacity to support Kenya’s economic growth,” KBA wrote.
Likewise, the bankers argue that the framework will also promote transparency by requiring banks to disclose all the components that make up interest rates, giving borrowers a clear and comprehensive understanding of loan interest rates.
In addition, KBA has noted that the new loan pricing model further integrates a borrower’s credit history as a key pricing factor, making past repayment behavior an important determinant of loan interest.
Bankers Association says the shift is expected to significantly expand access to credit for previously underserved groups, including MSMEs, youth, persons with disabilities, and women-led enterprises.
Similarly, it will also strengthen the transmission of monetary policy decisions, ensuring that changes in the policy rate are more directly and efficiently reflected in the cost of credit across the banking sector.
