Regulatory Alerts2015-01-15
Banking Circular No 1 of 2015 - Operationalizaton of the Kenya Banks\' Reference Rate (KBRR)
The Central Bank of Kenya introduced the Kenya Banks' Reference Rate (KBRR) in July 2014 to enhance transparency and improve transmission of monetary policy signals. Following a recent committee meeting, KBRR was revised from 9.13% to 8.54%. Effective from January 14th, banks will price their flexible rate loans based on this reference rate, with the aim of bringing individual bank interest rates as close as possible to the KBRR. Banks are expected to disclose any deviations from the reference rate, thus increasing transparency in credit pricing. By June 30th, existing flexible/variable credit facilities will be transitioned to the new framework. The Central Bank will continue working closely with stakeholders for a smooth and effective implementation of this framework.