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| Dr James Mwangi, Managing Director -Equity Bank. |
In line with the new regulation, Equity Bank has with
effect from 14th of September 2016 adjusted interest rates to 14.5% p.a being
the current base rate set and published by the Central Bank of Kenya vide
Banking Circular No 4 of 2016 dated 13th September 2016 of 10.5% p.a + 4%. At
the same time, interest on deposits held in local currency interest earning
accounts will earn interest at a minimum of 7.35% being 70% of the current base
rate as set by CBK at 10.5% p.a.
Dr. Mwangi said, “As a law abiding institution, Equity
Bank has adopted the base rate as set and published by CBK currently at 10.5%
and marking up with a 4% cap as provided for by the Law to arrive at 14.5%. The
new interest rate will be applied on a reducing balance basis. It will apply to
all local currency new credit facilities and existing ones whose performance is
on schedule. We invite our customers to visit their respective branches
in case they require more information or clarification on their credit
facilities.”
The Banking (Amendment) Act 2016 section 33(1)
(a) says “ the maximum interest rate chargeable for a credit facility in
Kenya at no more than four percent, the base rate set and published by the
Central Bank of Kenya….” Equity Bank has interpreted “credit facility” to
mean any form of financial accommodation extended to a customer through
institutions licensed by the Central Bank under the Banking Act irrespective of
the various channels. The desire to provide ceilings is a clearly discernible
intent of the law as evidenced by the Memorandum of Objects and Reasons to The
Banking Act (Amendment) Bill, 2015. The Act further prohibits any person
from entering into an agreement/arrangement to borrow or lend directly or
indirectly at an interest not accordance thereof
In this regard, Equity Bank has interpreted this to
include all credit facilities extended to customers by such institutions. This
includes loans through mobile phones or through other third party platforms or
collaborations with Mobile Network Operators (MNOs), credit card facilities as
well as micro finance loans. The Act in section 33(B) (2) further says “A
person shall not enter into an agreement to borrow or lend directly or
indirectly at an interest rate in excess of that prescribed by law”. The
fact that this prohibition extends to all categories of persons including
lenders and borrowers clearly makes out a case for wide interpretation.
Dr. Mwangi said, “Our suite of deposit accounts will
now attract a minimum interest rate of 7.35%p.a. We invite our customers to
make full use of these products to build their savings and investments. Our
Eazzy account is designed to make banking easy. It has no minimum operating
balance, no ledger fees, no maintenance fee, no monthly charges and no cash
deposit or cheque handling charges. Our Junior Member Account, Teen Member Account
and Achievers Student Account are easy to open, have no ledger fees and have an
embedded financial education benefit. Our Jijenge Account enables our customers
to save for specific investment goals. It is easy to open and allows the
customer to have a discipline of saving. A customer can access emergency loans
of up to 90% of their savings. Our School Fees Account is easy to open
and has no account maintenance balance or monthly charges, has four free
withdrawals in a year, free internal standing orders and three free bankers’
cheques in a year for school fees payment. With these products now attracting
premium interest at a minimum of 7.35%p.a, it gives Kenyans the opportunity to
build savings.”
Equity Bank has said it will further continue to support
its customers with Financial Education and Entrepreneurship training as well as
with products and solutions such as Insurance that will enhance the protection
of their assets. “We commit to continue partnering with our customers to avail
even more innovative products and services that make banking easy and
convenient, added Dr. Mwangi, and added, “We remain committed to our customers
and wish to assure them that we shall strive to remain as accessible as we have
always been in offering them products and services that meet their financial
needs and aspirations. “
Equity Bank which is the largest bank in Kenya in terms
of customer base with over 10 million customers and whose purpose is to
transform the lives and livelihoods of people, socially and economically, by
availing them modern and inclusive financial services that maximize their
opportunities. The bank has been a leader in innovation and has played a key
role in deepening financial inclusion from 4% in 1994 to the current 75% by
removing barriers such as minimum balances, ledger fees and conventional
collateral that made access to loans a preserve of a few. Further, the bank has
continued to innovate and inspire the industry around delivery channels such as
agency banking and mobile banking to broaden access and deepen inclusion.
Equity Bank Kenya has strategically and uniquely
differentiated itself by disrupting its business model, re-imagining the
distribution channels, digitization, re-positioning the balance sheet and
massive social impact investment in the Equity brand .Convergence of products
and services on omni channels has delivered unparalleled convenience and ease
of banking. This will also assist the bank to deliver its long term goals of
maximizing shareholder value for our investors.
Our commitment is to continue focusing on our
innovation agenda in order to deliver products and services that meet the
current and future needs of our customers, driven by technology and digitization
in order to make banking convenient and easy.
“The assurance that we want to give our customers is
that Equity Bank, which has walked with them for the last 3 decades will
continue supporting and partnering with them in their journey of socio-economic
transformation. We have partnered with farmers and seen over 600,000 peasant
farmers transition to small scale commercial farming, 1.3 million youth and
women have been trained on financial education, over 18,000 entrepreneurs have
been trained in entrepreneurship, over 326,000 women have been lent over Kshs
33bn through Fanikisha,” said Dr Mwangi.
Equity Bank has been involved in social investment
programmes in education and leadership development, agriculture, health,
environment, financial inclusion and literacy, innovation and entrepreneurship.
The Wings to Fly Programme which was launched in 2010, has extended
comprehensive secondary school scholarships to 12,377 academically gifted
children from financially challenged backgrounds. Similarly, the Equity Leaders
Programme which benefits Wings to Fly Scholars who attain an ‘A’ grade in
secondary school final exam as well as the top boy and girl from all the
counties in Kenya has so far benefited 3,405 young people, including more than
329 scholars and alumni at global universities.
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