Co-operative Bank has now complied with the new law capping interest rates signed Wednesday by President Uhuru Kenyatta.
On Friday, the lender instructed its managers to comply with the Banking (Amendment) Act which has set the maximum interest rate chargeable for any loan at four per cent above the Central Bank Rate announced by the regulator, CBK.
“Cooperative Bank will now offer all new credit facilities at a rate not exceeding 14.5 per cent per annum," the Group managing director Gideon Muriuki said in a statement Friday.
The announcement comes even as investors continue to withdraw their shares from banks listed on the Nairobi Securities Exchange.
"We advise that pending receipt of full guidelines from our regulator, the Central Bank of Kenya, particularly on the applicable rate, all new credit facilities shall be at a rate not exceeding 14.5 per cent," added Muriuki.
Banks, through the Kenya Bankers Association, on Thursday said that they will wait for guidelines from the regulator to comply with new law.
The law caps interest at four percentage points above the base rate to be determined by the Central Bank.
The amended Banking Act also requires banks to pay a minimum of 70 per cent of the base rate on fixed-term deposits.
According to the Star, the bank had registered the biggest drop of 10 per cent per share to Sh27 a piece at the NSE by around 1.20pm compared to Thursday's price. Equity’s posted a 9.92 per cent decline on its shares to Sh29.50 a piece.