KCB Bank’s Loan Rate Shake-Up: What Kenyan Borrowers Need to Know Now
KCB Bank has released an important notice updating how it prices loans for customers, driven by recent Central Bank of Kenya changes.
This shift aims to make lending more transparent and tailored to individual risks.
In a notice on January 28, KCB addressed Kenya Shilling-denominated local currency variable-rate loans and outlined how the revised framework will apply to customers with running loan contracts issued on or before November 30, 2025.
“From December 1, 2025, KCB Bank Kenya adopted the new Risk-Based Credit Pricing Model (RBCPM) for Kenya Shilling (Kes) denominated local currency variable-rate loans in line with Central Bank of Kenya’s (CBK) circular, for new facilities,” the notice read in part.
Triggered by CBK’s Rate Cut
The Central Bank of Kenya’s Monetary Policy Committee reduced the Central Bank Rate (CBR) to 9% from 9.25% on December 9, 2025.
KCB quickly aligned its base lending rate to this new 9.0% figure, affecting Kenya Shilling-denominated variable-rate loans.
This follows the rollout of a new Risk-Based Credit Pricing Model (RBCPM) starting December 1, 2025, which bases rates on the CBR plus a customer-specific margin reflecting credit risk.
Additionally, KCB noted that from March 1, 2026, variable-rate facilities denominated in Kenya Shillings will be priced as the Central Bank Rate plus the applicable premium. The premium reflects the risk attributable to the customer’s evaluation at the time of the loan application, in addition to fees approved by the Central Bank of Kenya.
“Variable-rate facilities (Kes-denominated) will be priced as CBR + Premium (K), with the Premium reflecting risk attributable to evaluation of the customer at the time of loan application.”
How New and Existing Loans Are Affected
New variable-rate loans from December 11, 2025, will use the 9.0% base rate plus a personalized premium.
Facilities applied for since December 1 will adjust after a mandatory 30-day notice period per CBK rules.
Existing loans before December 1 stay on old terms until the transition ends on February 28, 2026, with customers getting prior notification.
New variable-rate loans issued after December 11, 2025, take effect immediately under the new pricing structure of 9% CBR plus a customer-specific margin, marking a lower base rate.
Loans applied for between December 1 and 10, 2025, will adjust to the 9% CBR plus margin after the mandatory 30-day notice period as required by CBK regulations.
Existing loans before December 1 will transition to the CBR plus margin structure by February 28, 2026, with customers receiving the required 30-day prior notification.
This pricing overhaul promotes fairness, with lower rates for low-risk customers and higher for others, boosting credit access amid easing rates.
The Bank clarified that existing customers will not be subject to the fees and charges under the revised Risk-Based Credit Pricing Model.
The notice states that these fees shall apply only to new facilities and will not apply to customers with active loan contracts issued on or before November 30, 2025.
“Existing customers will not be subjected to the fee components in the revised RBCPM; these fees shall only apply to new facilities.”
The bank also emphasised transparency requirements under the Central Bank of Kenya framework. Customers will receive full disclosure of the total cost of credit in line with the Central Bank of Kenya Transparency requirements.
“The Total Cost of Credit will be fully disclosed to customers in line with the CBK Transparency requirements.”
It mirrors global standards using benchmarks like KESONIA as a fallback. Equity Bank made similar announcements, signaling industry-wide shifts that could ease borrowing costs as Kenya’s economy faces global headwinds like trade tensions.
Review your loan terms and contact your KCB relationship manager, call the contact center, or visit a branch for details. All fees and total credit costs now fully comply with CBK transparency rules. Stay informed as rates evolve with economic conditions into 2026.