CBK turns down banks’ request to increase charges

The Central Bank of Kenya (CBK) has rejected 13 requests by commercial banks to raise transaction fees charged on customers, governor Patrick Njoroge revealed Tuesday.

Banks have been on the spot over allegations of imposing illegal levies on their customers since last year, following the coming into force of the new law capping interest rates.

“Since September 2016, we have had something like 16 requests for fees, imposition of a fee or adjustment in fees or request for approval for fees. We have only approved three,” said Dr Njoroge at a press briefing in Nairobi.

“Those three (requests) have been new services, new products. All the other 13 (requests) we have held them in abeyance.”

CBK had last year raised the red flag over numerous complaints from customers after their banks imposed arbitrary charges or unilaterally converted their savings accounts into transactional accounts, thereby making them lose the benefits that were accruing from their accounts.

The regulator maintained then that any fees, which had been effected by institutions without the requisite CBK approval should be reversed immediately.

Yesterday, Dr Njoroge insisted that banks need to review and scrap all “nuisance fees” imposed on customers.

“We repeat our call (to banks) of reviewing their charges and abolishing nuisance fees,” said Dr Njoroge.

Specific customer

“It is not even significant in terms of income for them but from a specific customer obviously it is significant.”

He urged banks instead to focus on solving customer needs, which would attract sustainable revenues instead of looking for short cuts.

“Customer relationship management should be central in the business models that the banks are adjusting towards,” said Dr Njoroge.

While warning that a majority of banks are yet to address existing concerns over the high cost of credit, Dr Njoroge said CBK would enhance the banking sector credit information sharing mechanism to make it easier for customers to choose between lenders when seeking credit.

Information sharing

“We intend to expand to a benchmark basket … we want to improve the credit information sharing system that we have,” he said.

“Recently we reviewed it in-house and there are some areas we want to expand in terms of data quality, how it is used by banks in making those decisions and also in terms of public awareness.”

“This is something that is not really well understood and banks may not be really using in the way it is intended.” The CBK last month unveiled a common web platform where banks are required to publish information on the cost of credit for personal loans and mortgages.

The website (www.costofcredit.co.ke) requires all banks to publish the annual percentage rate (APR), loan repayment schedule and any additional cost of credit on their loans.

Dr Njoroge reiterated this would balance the playing field.

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