KBA director of communication Nuru Mugambi, chief executive Habil Olaka with director of policy Jared. [PHOTO/the-star.co.ke]
Consumer Downtown Association (CDA) in partnership with Kenya’s Bankers Association (KBA) has embarked on strengthening the relationship between banks and their consumers that entails the introduction of a new business model on the total cost of credit consumers.
KBA Director of Communications Nuru Mugambi stated that this will create a platform that provides a detailed summary of all cost of credit and opportunity for consumers to choose from an informed perspective of the financial institutions they prefer borrowing from.
Mugambi added that consumers of banking services have continuously had wrangles with financial institutions and some of these conflicts have ended up in courts attracting huge fines to appellants and respondents.
Director of Consumer Unity and Trust Society (CUTS) Clement Onyango explained that the cost of credit has not been clear to borrowers due to lack of full disclosure by the lending institutions therefore, customers have been making choices to seek credit facilities from lending institutions based on interest rates charged only.
“This is why the Kenya commercial banks through the KBA, have come up with an Annual Percentage Rate (APR) pricing model that will enable borrowers to compare different bank loan rates based on standardize parameters and a computation system for consumers to compare different interest rates charged by banks before they decide on which bank they will borrow money from,” Clement further stated.
The CDA believes that the issue of capping interest rates will be safe guarded by the APR.