The bank said the changes are meant to give borrowers relief and support the wider goal of boosting economic growth.
The Monetary Policy Committee made the CBR adjustment on December 9, 2025.
The Monetary Policy Committee made the CBR adjustment on December 9, 2025.
According to the committee, the lower rate is expected to make credit more affordable for Kenyans and encourage both households and businesses to take up new loans.
Following the policy shift, Equity Bank released a notice on Thursday, December 11, confirming that all new local-currency variable-rate loans taken from December 10 will now be priced using the new CBR of 9%, plus a customer-specific premium. This premium varies depending on the borrower’s credit profile.
The bank added that loans issued from December 1 onward will also be recalculated to reflect the new, lower rate.
Following the policy shift, Equity Bank released a notice on Thursday, December 11, confirming that all new local-currency variable-rate loans taken from December 10 will now be priced using the new CBR of 9%, plus a customer-specific premium. This premium varies depending on the borrower’s credit profile.
The bank added that loans issued from December 1 onward will also be recalculated to reflect the new, lower rate.
In the notice, Equity explained that the change is immediate and meant to ensure fairness for customers who recently borrowed under the previous rate.
For customers whose existing loans still use the Equity Bank Reference Rate (EBRR), the transition to the new structure will happen gradually.
For customers whose existing loans still use the Equity Bank Reference Rate (EBRR), the transition to the new structure will happen gradually.
The bank plans to switch all such loans to the CBR system by February 28, 2026. Affected customers will receive a 30-day notice, and where necessary, a variation letter explaining the new pricing formula.
Equity Bank assured borrowers that the changes fully comply with CBK rules and asked customers to reach out to their relationship managers or visit a nearby branch if they need clarification.
Equity Bank assured borrowers that the changes fully comply with CBK rules and asked customers to reach out to their relationship managers or visit a nearby branch if they need clarification.
The bank also promised to support clients through the transition so they can understand how the adjustments affect their repayment schedules.
The rate cut and Equity’s pricing shift come at a time when Kenya’s banking sector is undergoing major reforms in how loan prices are set.
The rate cut and Equity’s pricing shift come at a time when Kenya’s banking sector is undergoing major reforms in how loan prices are set.
CBK recently introduced the Risk-Based Credit Pricing Model (RBCPM), which relies heavily on a market-determined benchmark known as the Kenya Shilling Overnight Interbank Average (KESONIA).
Under the new framework, banks calculate loan interest by adding a customer premium to KESONIA.
Under the new framework, banks calculate loan interest by adding a customer premium to KESONIA.
This means borrowers with strong financial histories and reliable incomes may pay lower rates, while those considered higher risk may pay more. The model aims to make loan pricing more transparent, predictable, and fair.
Although KESONIA is seen as the future benchmark, not all banks have fully embraced it. According to CBK’s latest briefing, only about 18% of Kenyan banks have fully adopted KESONIA-based pricing. Another 34% use a mix of CBR and KESONIA.
Although KESONIA is seen as the future benchmark, not all banks have fully embraced it. According to CBK’s latest briefing, only about 18% of Kenyan banks have fully adopted KESONIA-based pricing. Another 34% use a mix of CBR and KESONIA.
The rest still rely entirely on the CBR. CBK expects full transition across the industry by March 2026.
The Central Bank Governor noted that every commercial bank has already submitted its risk-based pricing formula, and CBK will monitor how transparently banks apply the new system.
The Central Bank Governor noted that every commercial bank has already submitted its risk-based pricing formula, and CBK will monitor how transparently banks apply the new system.
He explained that some banks prefer the traditional CBR, while others use KESONIA, and a few combine both benchmarks.
KCB Bank Kenya is another major lender that has responded to the CBR cut. Earlier this month, KCB adjusted its lending rates to reflect the new 9% benchmark for new loans under the RBCPM model, which it began using on December 1.
KCB Bank Kenya is another major lender that has responded to the CBR cut. Earlier this month, KCB adjusted its lending rates to reflect the new 9% benchmark for new loans under the RBCPM model, which it began using on December 1.
Existing loans will remain unchanged until they transition on February 28, 2026.
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