Why banks are yet to fully apply risk-based lending

The Central Bank of Kenya, Nairobi. FILE PHOTO | DENNIS ONSONGO | NMG

The delay by banks to transition fully to risk-based loan pricing has hampered the transmission of the Central Bank of Kenya (CBK) monetary policy.

The logjam on risk-based pricing has arisen primarily from lack of a broad-based approvals by the CBK to individual banks’ risk-based pricing models, where only 33 banks have had the green light to factor in the likelihood of loan default.

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