Commercial and retail banks in Kenya, recognizing the increase in demand for microloans in the country, have lowered their loan minimums to compete against moneylenders and microfinance institutions (MFIs). Co-operative Bank of Kenya Limited, which was established in 1965, lowered its loan minimum to KES 5,000 (USD 61.5) from KES 30,000 (USD 369), and Kenya Commercial Bank (KCB), established in 1896, lowered its loan minimum to KES 5,000 from KES 10,000 (USD 123). Other banks that offer microcredit to their customers include Family Bank, Equity Bank and National Bank of Kenya with loan minimums of KES 700 (USD 8.6), KES 5,000 (USD 61.5) and KES 1,000 (USD 12.3) respectively.
Microloans, which are given to underserved individuals to finance farm inputs; equipment; livestock feeds; and micro-, small and medium-sized enterprises, often carry high interest rates, which can make them lucrative for lenders. Kenyan banks have also installed Automated Teller Machines (ATM) in low-income neighborhoods as they strive to gain a larger share of the microfinance market [1]. The Kenyan MFIs reporting data for 2009 to the Microfinance Information Exchange (MIX), the microfinance information clearinghouse, have an aggregate loan portfolio of USD 1.1 billion, total assets of USD 1.9 billion and 1.5 million active borrowers.
By Julie Moksim, Research Associate
About Co-operative Bank of Kenya Limited: The Co-operative Bank of Kenya was established in Kenya in 1965 and went public in December 2008. As of January 2011, the bank runs three subsidiaries: Kingdom Securities Limited, a stockbroking firm in which Co-operative Bank holds a sixty-percent stake; Co-op Trust Investment Services Limited, a fund management subsidiary wholly-owned by the bank; and Co-operative Consultancy Service Limited, the wholly-owned corporate finance, financial advisory and capacity-building subsidiary of the bank. The bank reported total assets of KES 110 billion (USD 1.3 billion) as of December 31, 2009.
About Kenya Commercial Bank (KCB): KCB’s history began in 1896 when the National Bank of India opened a branch in Mombasa, Kenya. In 1958, the bank was renamed to National and Grindlays Bank when Grindlays Bank merged with the National Bank of India. In 1970, when the Kenyan government acquired 100 percent of the shares of the bank, it was renamed to Kenya Commercial Bank. As of December 31, 2009, KCB reported total assets of KES 163 billion (USD 2 billion).
[1] Business Daily: “Banks Slash Loan Limits in Race for Mass Market” by David Mugwe, January 5, 2011, http://www.businessdailyafrica.com/Banks slash loan limits in race for the mass market/-/539552/1083652/-/8ig1pm/-/index.html
MicroCapital’s Microfinance Universe Profile: Co-operative Bank of Kenya Limited
MicroCapital’s Microfinance Universe Profile: Kenya Commercial Bank (KCB)
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https://www.microcapital.org/microfinanceuniverse/
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