DTB Adjusts Lending Rates Under CBK’s Revised Credit Pricing Rules
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Diamond Trust Bank Kenya (DTB) has reduced its lending rates and confirmed its transition to the new credit pricing system following the Central Bank of Kenya’s (CBK) reforms introduced on September 1, 2025.
In a customer notice, DTB announced that the DTB Base Rate for variable interest rate Kenya Shilling-denominated credit facilities has been cut from 14.21% per annum to 13.77%, effective September 1, 2025.
The total lending rate will now be determined by the sum of the DTB Base Rate and a customer-specific variable margin that represents the borrower’s credit risk premium.
The adjustment comes after CBK overhauled the country’s lending framework on September 1, 2025, replacing the previous risk-based model that had been in effect since 2019.
The new rules require lenders to calculate interest rates using either the Kenya Shilling Overnight Interbank Average (KESONIA) or the Central Bank Rate (CBR) as the reference rate, plus a CBK-approved margin that factors in operational costs, borrower risk, and expected returns.
In line with the guidelines, DTB will transition to KESONIA/CBR, with additional communication to customers expected in due course. The bank confirmed that all new variable rate loans contracted after September 1, 2025, will adopt the revised pricing model subject to its board’s approval.
Existing loans will migrate by February 28, 2026, within CBK’s six-month transition window that begins December 1, 2025.
Diamond Trust Bank Kenya becomes the second lender to adopt the new model after Stanbic Bank.
Stanbic Bank said that all new variable rate loans contracted after September 1, 2025, will adopt the revised Risk-Based Credit Pricing Model, subject to approval by its board. Existing loans will transition by February 28, 2026, in line with CBK’s six-month transition window that begins on December 1, 2025.
The CBK said the previous model failed to deliver transparency and fairness, as many banks placed borrowers into broad categories rather than assessing individual risk profiles. Hidden charges, including penalty interest and processing fees, were also common, leading to inflated borrowing costs and limited oversight.
Under the new framework, all banks must calculate interest rates by applying a CBK-approved margin, and the published rates will be disclosed on the CBK website and in national newspapers. This will allow borrowers to compare costs across different banks before taking loans.
CBK noted that the changes were benchmarked against established credit pricing systems in the United States, United Kingdom, India, Brazil, and South Africa, where central policy rates serve as the base, with well-defined risk and cost premiums applied.
The regulator expects the reforms to improve predictability, strengthen the link between monetary policy and credit pricing, and enhance consistency across the banking sector.
Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.
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