Borrowers considered risky by Equity Bank will be given loans at highs of 21 per cent. This follows the bank’s commencement in implementing a new loan pricing model.

In the new model, riskier borrowers will be given loans at 21.02 per cent.

The new model comes with a base rate of 12.5 per cent plus a maximum margin of 8.5 per cent.

However, the bank has not disclosed how it will determine of a borrower is risky or not. A customer who spoke to a local daily says that their loan has already been shifted from 13 per cent to 18 per cent. However, the customer did not receive any explanation on how their loan interest was bumped up by five points.

“Equity Bank (K) LTD received approval from the CBK (Central Bank of Kenya) to implement risk-based pricing when lending to customers,” Equity Bank said in a notice.

“The new pricing model applies a reference rate (in this case Equity Bank Reference Rate, currently at 12.52 per cent) plus a margin (currently a maximum of 8.5 percent) per annum.”

Sourced from bizna