Commercial Bank of Africa became the first bank to cap its interest rates for loans and deposits using the Kenya Bankers Reference Rate.

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Currently, the KBRR stands at 8.9 per cent, meaning CBA will lend at 12.9 per cent for both new and old loans.

According to the Star, the revision will become effective beginning September 14.

The bank seems to have taken a divergent route since several banks who have slashed their lending rates have capped their interest and deposit rates using the Central Bank Rate which is 10.5 per cent.

The move follows the coming into effect of the Banking (Amendment) Act 2016 which was signed into law by President Uhuru over two weeks ago.

“The new rates will be based on the Kenyan Bank Reference Rate (KBRR) as advised from time to time by the Central Bank of Kenya,” read a statement from CBA managing director Isaac Awuondo.

“As a result, CBA will lend at a maximum interest rate of 12.9 per cent (KBRR +4) for all local currency credit facilities and pay a minimum interest rate of 6.23 per cent (70% of the KBRR) on local currency interest bearing deposits,”added Awuondo.