Cheaper Loans as CBK Lowers Lending Rate to Below 10%

Hello and welcome to the Money News Roundup. Today, we’re covering the latest financial policy directions and projections issued by the Central Bank of Kenya after the Monetary Policy Committee (MPC) meeting as well as 71,000 Kenyans listed on CRB for defaulting HELB loan and 20,000 businesses risking closure by KRA.

‍CBK Lowers Base Lending Rate

The Central Bank of Kenya (CBK) has lowered the Central Bank Rate (CBR) from 10 per cent to 9.75 per cent.

According to CBK, the easing of the monetary policy is aimed at stimulating lending by banks to the private sector.

It was noted that the move would enable Kenyans and businesses to have access to cheaper loans as banks will be expected to also lower their interest rates after the move.

“The Committee observed that the average lending rates in the domestic market have continued to decline, while private sector credit growth has recovered modestly,” read the statement in part.

‍Other reports and projections from MPC

‍Inflation - Inflation is expected to decline or remain unchanged in the next three months due to the projected stable food prices that will be occasioned by favourable weather conditions and stable pump prices and exchange rate.

‍Business Growth - There is sustained optimism about business activity and economic growth prospects for the next 12 months. Businesses, nonetheless, express fears over the high cost of doing business, subdued consumer demand, and increased global uncertainties.

‍Non-Performing Loans Increase - The ratio of gross Non-Performing Loans (NPLs) to gross loans increased from 17.2 percent in February to 17.6 percent in April 2025. The rise was recorded in trade, personal and household, tourism and hotels, and building and construction.

‍Over 70,000 Kenyans Listed on CRB for Defaulting on HELB Loans 

71,806 beneficiaries of the Higher Education Loans Board (HELB) have been listed on various Credit Reference Bureaus (CRBs) for failing to meet their loan obligations.

According to the Business Daily, hundreds of thousands of beneficiaries of the loans were yet to pay back Ksh35 billion to the board, forcing the institution to continue with initiatives to push for the repayments.

Owing to the negative listing, the over 70,000 beneficiaries will be unable to access loans from other financial institutions.

"If all debtors paid their dues, HELB would reduce reliance on the National Treasury funding. It would expand access to higher education, and institutional credibility would be strengthened," HELB CEO Geoffrey Monari said.

Also Read: New Graduates’ Salaries Report Sends HELB Back to the Drawing Board

KRA Flags Over 20,000 Businesses in VAT Cleanup

As reported by the People Daily, the Kenya Revenue Authority (KRA) has flagged 20,981 businesses over tax non-compliance in a clean-up of the VAT system.

According to the report,  KRA Deputy Commissioner for Micro and Small Taxpayers Gideon Muhwa revealed that the taxman has introduced a system that is able to identify discrepancies in tax obligations, especially for VAT claims.

The officials highlighted that many businesses had used loopholes to make fraudulent VAT claims, costing the government billions. The over 20,000 businesses, therefore, are at the risk of deregistration.

“VAT is a consumption tax that should be one of our top revenue sources, yet its performance remains below expectations due to widespread non-compliance and fraud,” he stated.

“To improve accuracy and transparency in VAT reporting, KRA introduced the VAT auto-population system in December 2024. The system leverages data from the electronic Tax Invoice Management System (eTIMS) to automatically pre-fill VAT returns for registered taxpayers.”

‍Kenya Railway’s Update on Construction Works for SGR Extension

Kenya Railways has announced that construction works for the extension of the Standard Gauge Railway (SGR) line from Naivasha to Kisumu will begin by the end of the year.

According to the MD Philip Mainga, the state corporation has already identified the land where the railway line will pass and the people to be compensated.

As detailed in the report by KBC, the corporation is currently finalizing the environmental impact assessment before the construction works begin.

The corporation is also considering the construction of a railway line connecting Kenya and Ethiopia.

Also Read: NSSF Partners With Chinese Company to Fund Rironi-Mau Summit Road

Court Awards Man Ksh450K After Bank Fails to Investigate Loss of ATM Card 

EquIty Bank has been ordered to pay Ksh450,000 to a customer who sued the financial institution after losing Ksh600,000, following the theft of his ATM card.

According to Business Daily, the man lost his ATM card in 2019. It was reported that the man was drugged as he lost his personal belongings after hugging a woman in Mwea town.

The man then proceeded to report the loss of the ATM card to the bank after noticing that withdrawals were being made from his account.

However, the bank failed to initiate the investigations immediately. According to court documents, the bank only launched investigations after 9 months. Therefore, the court determined that the bank was negligent, awarding the man Ksh450,000 for damages.