hidden charges

eading commercial banks in East Africa exploit their customers by exposing them to numerous charges.

Dubbed “hidden”, the charges are not explicit when a customer applies for a loan, a survey by the Central Bank of Kenya has revealed.

The charges are overlooked by loanees but they significantly change the total cost of a loan.

The Bank of Africa, National Bank of Kenya and Family Bank charge the highest level of ‘other fees’.

These run to over Ksh2,500 for consumers of unsecured loans of upto Ksh50, 000.

The Bank of Africa, whose interest rate is 18.5 per cent, calculated on a reducing balance, charges Ksh5,000.

The Bank of Baroda, Commercial Bank of Africa, First Community Bank and K-Rep have no fees for unsecured loans.

Despite this, K-Rep is the most expensive bank to consumers of unsecured loans of upto Ksh50, 000.

Its annual interest rate is the highest, at 21 per cent, followed by Equity Bank’s 18 per cent. These rates are charged on a straight-line basis.

For those seeking unsecured loans of upto Ksh500,000, National Bank of Kenya and Consolidated Bank charge the highest levels of ‘other fees’ — averaging Ksh25,000.

The director of bank supervision, Central Bank of Kenya, Rose Detho says disclosures of the cost of credit are among the biggest problems facing people seeking bank loans.

Last year, the Central Bank, in partnership with the Financial Sector Deepening Trust, commissioned a South African consultancy firm, Genesis Analytics, to study the possible implementation of an annual percentage rate (APR).

This is a disclosure measure that factors “other fees” over and above the interest rate.

Ms Detho says the study will be released next month. It is expected that APR will make it easier for customers to tell the cheapest bank by looking at the interest rates.

Meanwhile, Standard Chartered Bank is the most expensive bank to run an account in, according to the latest survey on bank charges released last week.

The survey, Bank Charges and Lending Rates, uses data supplied by banks.

shows that it costs an average of Ksh2, 757 to operate a current account in Stanchart, compared to Ksh440 in Fina Bank. The survey is compiled by Research International on behalf of the Central Bank of Kenya using data for the period ending December 31, 2008.

‘’As you may be aware, this is the third time we are updating the survey since its inauguration in August 2007. The Central Bank is encouraged by the continued public interest in this initiative,” Ms Detho said. For customers operating a bundled account- one where a bank charges a single discounted fee for a set of services- StanChart’s X Account is the most expensive with users paying on average Ksh1, 438 more than the fixed monthly bundle account fee of Ksh1,250.

However, NIC Bank’s Platinum customers pay the highest average total fee of Ksh2, 808 but driven by a higher fixed Ksh2, 000 monthly bundled fee. Barclays Bank’ Premier Account comes a close third with a total cost of Ksh2,390.

The fixed bundled fee is what banks to advertise, sometimes making them appear to offer cheaper services.

On transaction accounts, Stanchart customers pay an average of Ksh907, ranking it second to Equatorial Bank which charges an average of Ksh489 but imposes a minimum monthly fee of Ksh1, 000.

Early in the year, commercial banks in Uganda reviewed their lending rates upwards due to what analysts say was due to tight liquidity conditions ‘that had pushed up short-term interest rates’.

Standard Chartered Dfcu raised its base lending rate from 19 per cent to 20 per cent while Stanbic whose rates were the lowest in the country raised it by over 2 percentage points to 18.5 per cent.

Market players blame the tightening liquidity conditions on the rising inflation that hit 14.3 per cent in January.

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Uncle niaje??? Saa ii ndio basimati inaisha kwa kichwa???

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yeah im looking for more

Hii nitabookmark nisome nikiwa sober

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Randy!!? You are realy very keen. Every thread you are sure to question its credibility, including my own. I hope you wont ask me abt the citrus fruits again!!

How was your day?? I hope umeacha kucatch

What!! Am a man man!

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Your words not mine…

Kila mtu hupata rate moja ? Regardless of history with the bank or term of loan you all get 18% ?

MAN. Not WOMAN

Hehehe…whatever you say.

I heard you. You said twice!

Hio ni closet imepigwo teke hivyo?

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