KENYANS CAN'T AFFORD BANK LOANS

Banking charges in Kenya are still high while services are beyond the reach of the majority.

According to a survey commissioned by the Central Bank of Kenya, the cost of operating savings and current accounts or securing a loan are high and cannot be afforded by majority of Kenyans.

The survey shows that interest rates on loans charged by the top banks with more than 10 branches countrywide are still high, varying between 15 and 19 per cent.

In the major banks category, Consolidated Bank offers the cheapest loans charging 15.50 per cent interest rate, followed by Barclays Bank of Kenya at 16 per cent, K-Rep Bank (16.50 per cent), Standard Chartered Bank (18 per cent), Equity Bank (18 per cent), Kenya Commercial Bank (18.11 per cent) and Cooperative Bank (19 per cent).

However, the study, conducted by Research International and public relations company Tell-Em, says customers do not only pay the total amount borrowed plus the interest rates but also other charges which include commitment/ facility fees, processing fees, negotiation fees and valuation fees, thereby making loans even more expensive.

The study was carried out in March and involved 1,100 bank customers chosen randomly in Nairobi, Mombasa and Kisumu.

It also gathered data provided by banks to the Central Bank for each of their service elements.

“It is interesting how the other fees charged by a bank can significantly change the total cost of a loan for a customer,” said Melisa Baker of Research International during the launch of the survey at Central Bank of Kenya headquarters.

Borrowing money is most expensive at City Finance, Oriental, Fina, Commercial Bank of Africa and National Bank of Kenya.

Ms Baker said some of the banks offering cheap loans could not be easily accessed by majority as they operated fewer branches countrywide. “Due to the fewer branches, it is difficult for majority to access the cheap loans offered by the banks.”

The study cites Chase Bank as the most expensive financial institution to operate a savings account followed by Imperial Bank and Barclays Bank respectively.

Others are National Industrial Credit Bank, Fidelity Commercial Bank, National Bank of Kenya and Consolidated Bank.

However, it is cheaper to operate a savings account with Diamond Trust, Equatorial, Standard Chartered and East Africa Building Society.

The function was attended by the chief executive officers of various banks and representatives of the Kenya Bankers Association.



SOURCE: DAILY NATION