Kenya's Risk-Based Credit Pricing Model (RBCPM) ties each borrower's bank loan rate directly to their own credit risk, and PesaMarket tracks how it reshapes what Kenyan borrowers pay from 2025 into 2026.
The Central Bank of Kenya has introduced major changes to how bank loans must be priced. The new Risk-Based Credit Pricing Model (RBCPM) already applies to new loans and will apply to all existing loans with variable pricing by February 28, 2026. Here is what every borrower needs to know.
What Changed?
Removed: The Central Bank Rate (CBR)
The CBR was the reference rate banks used to set loan prices. It was announced by the CBK and did not always reflect actual market conditions.
Introduced: KESONIA (Kenya Shilling Overnight Interbank Average Rate)
KESONIA is the new reference rate—it reflects the actual average rate at which banks lend money to other banks overnight. It is a market-driven and more transparent rate.
Key Dates
| Date | What Will Happen |
| September 1, 2025 | The RBCPM rule takes effect for all new variable-priced loans. |
| February 28, 2026 | The RBCPM rule takes effect for all existing variable-priced loans. |
⚠️ Action Required: If you have a variable-priced bank loan, your interest rate structure will change by February 28, 2026. Contact your bank to understand how this will affect your payments.
How the New Pricing Works
Under the new system:
Loan Rate = KESONIA + K (Premium)
Where K includes:
- The bank's operating costs
- Profit for shareholders
- Your personal risk profile
What Does This Mean for You?
- Better credit score = lower rates
Your loan rate now directly reflects your financial creditworthiness.
- Disclosure
Banks must publish their range of rates on the Total Cost of Credit (TCC) website.
- Market-driven rates
Rates change according to actual market conditions, not just CBK decisions.
Who Is Affected?
Included
- All KES loans with variable interest from banks.
- Personal loans.
- Home loans with variable interest.
- Business loans.
- Asset finance loans.
Excluded
- Fixed-interest loans (interest locked from the start).
- Loans in foreign currency (USD, EUR, GBP).
- Digital/mobile loans from non-bank lenders.
How to Prepare
1. Check Your Loan Type
- Is it a fixed-rate loan? No change—your rate is locked.
- Is it a variable-rate loan? Changes are coming on February 28, 2026.
2. Contact Your Bank
Ask the following specific questions:
- How will the RBCPM affect my interest rate?
- What is my current "K"?
- Will my monthly payments change?
3. Improve Your Credit Score
Because your risk profile now directly affects your rate:
- Pay all loans on time.
- Clear all negative CRB listings.
- Reduce outstanding debt.
- Build a good credit history.
Compare Bank Transparency
Banks must now publish:
- Average loan rates (weighted)
- Average premium ("K") rates (weighted)
- All fees for each loan type.
Check the rates here: Total Cost of Credit Portal
Expected Impact on Interest Rates
For Qualifying Borrowers
- Could mean lower rates if you have a good credit history.
- Better pricing as banks continue to compete to attract low-risk customers.
For Higher-Risk Borrowers
- Could mean higher rates, priced to reflect the actual risk.
- This may encourage customers to improve their credit scores.
Overall
- More transparent pricing across the whole sector.
- Easier to compare banks.
- Interest rates will respond more quickly to monetary policy changes.
Frequently Asked Questions
Will my monthly payments change?
Possibly. If you have a variable-priced loan, your bank must notify you of any changes before February 28, 2026.
What happens if I disagree with my risk premium?
You can:
- Ask your bank to explain how the risk premium is calculated.
- Improve your credit score and request a reassessment.
- Compare prices from different banks—different banks may assess risk differently.
Does this affect Fuliza, M-Shwari, or Tala?
No. Digital/mobile lenders are regulated separately and are not subject to the RBCPM rules.
Can I switch to a fixed-rate loan?
Yes, but fixed rates are usually higher. Please consider your situation carefully.
What exactly is KESONIA?
KESONIA (Kenya Shilling Overnight Interbank Average Rate) is the average rate at which banks lend to each other for short-term (overnight) loans. It is calculated daily based on actual activity.
Why This Matters
The RBCPM changes aim to:
- Strengthen monetary policy transmission - CBK rate adjustments affect your payments more quickly.
- Promote transparency - See exactly what you are paying and why.
- Promote responsible lending - Pricing matches actual risk.
- Encourage competition - Easier to compare banks.
Next Steps for Borrowers
- February 2026: Watch for notices from your bank.
- Compare options: Use PesaMarket to compare bank loan rates.
- Improve your credit score: A better score = better rates under the RBCPM.
Last updated: January 2026. Confirm the specific changes with your bank as the February 28, 2026 deadline approaches.