New data by the Central Bank of Kenya (CBK) shows that interest on savings offered by banks has decreased to 3.78 per cent.
This is the lowest rate in about four years as banks register high liquidity . A report released recently by CBK shows that more people are keeping money outside the formal banking system.
“The savings rate generally indicates how much interest a saver would earn on their regular savings and not termed deposits, which usually earn a much higher rate, which was quoted at 6.41 per cent in September,” reported a local business newspaper.
Kenya Bankers Association chief executive Habil Olaka was quoted saying that reduced demand for cash saw the banks reduce their returns on savings.
“Because of the pandemic, banks have become risk-averse to avoid an increase in their bad loans. This is why lending to the private sector is not growing as it should, as a result, their appetite for cash is not growing hence banks are not giving a lucrative deal to savers,” BD reported.
