KCB Bank Kenya has announced a major shift in its lending framework, confirming that it will transition to the Central Bank of Kenya’s (CBK) newly issued Risk-Based Credit Pricing Model (RBCPM) from 1 December 2025.
The move is part of a nationwide mandate requiring all banks to adopt the revised pricing structure as the financial sector aligns with CBK’s broader monetary policy reforms.
The transition marks one of the most significant adjustments to Kenya’s credit market in recent years and is expected to influence how borrowers access loans, how banks price risk, and how transparency is enforced within the lending ecosystem.
The Risk-Based Credit Pricing Model Kenya has been widely discussed among lenders, consumers, and regulators as the country seeks to address concerns around high lending rates and opaque loan-pricing practices.
Under the new framework, all new local-currency variable-rate loans issued by KCB from December 2025 will fall under the revised pricing structure.
The bank stated that lending rates will now be determined using a Common Reference Rate; the Central Bank Rate (CBR), alongside a customer-specific risk-based premium, commonly referred to as “K”.
This new system integrates a more predictable benchmark with a tailored assessment of each borrower’s creditworthiness. According to the CBK, the intention is to introduce a pricing environment that is more transparent, consistent, and aligned with global standards on credit risk management.
The Common Reference Rate, which replaces the former benchmark Kenya Banks Reference Rate (KBRR), will follow the policy rate set by CBK under the Monetary Policy Implementation Framework.
The customer-specific premium will be adjusted according to individual borrower profiles, meaning clients with stronger credit histories may benefit from lower premiums, while higher-risk borrowers may be charged more.
This approach is a core feature of the Risk-Based Credit Pricing Model Kenya, a term that has grown in online search interest as consumers seek to understand its implications. For customers with existing variable-rate loans, KCB said the new pricing system will not take effect immediately.
Instead, current loans will continue under their existing terms until the end of the CBK-mandated transition period on 28 February 2026, after which they too will migrate to the new model.
This phased transition is expected to provide borrowers sufficient time to adjust and understand how the revised system will affect their repayment obligations.
In addition, the bank assured customers that all applicable fees, charges, and the total cost of credit will be fully disclosed in line with CBK requirements.
This is part of a wider push by the central bank to enforce transparency and ensure borrowers are fully informed before signing loan agreements.
KCB emphasized that it remains committed to responsible lending, promising continued support for customers both during and after the transition.
The bank highlighted that the shift to the revised Risk-Based Credit Pricing Model Kenya aligns with its long-term strategy to enhance financial trust and improve the overall customer experience.
The new credit pricing rules arrive at a time when many Kenyans have expressed concern over rising borrowing costs, inflation pressures, and limited access to affordable credit.
Analysts note that while the risk-based approach may initially lead to varied interest rates across different customer segments, the model could ultimately enhance market efficiency by rewarding strong credit behaviour and promoting better risk management practices among lenders.
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