Equity bank is loosening its conservative lending strategy - introduced after the rate caps came into force last year - in a bid to protect its market share.
Chief executive James Mwangi, in a briefing to staff on the quarter one results, asked the credit department to take advantage of the bank's high liquidity to lend to a market starved of cash.
Equity's conservative lending has seen its loan book shrink by Ksh21 billion ($210 million) in the past year to Ksh208 billion ($2 billion), while its liquidity ratio has nearly doubled to 53 per cent.
The lender, with a presence in five East African countries and the Democratic Republic of Congo, preferred to lend to the government as it increased its holding of Treasury bills and bonds to Ksh102 billion ($1 billion) from Ksh38 billion ($380 million) in March last year.
Mr Mwangi said customers are attracted to a bank that can finance their ambitions, a strategy that helped to grow Equity into be the largest retail bank in East Africa.
He said they would concentrate on funding small and medium sized businesses (SMEs).
It is understood that the bank may have turned away more than 500,000 applications since the rate caps came into effect. Last week, Central Bank Governor Patrick Njoroge said that SMEs were being denied credit mainly by large banks, a position the governor feared would hurt the economy.
Loans to SMEs declined six per cent in spite of increased lending by small banks to the sector.
Equity Bank is also in the process of restructuring, following the departure of four top level managers including long serving innovation driver John Staley.
Others who have left include Jumaane Tafaawa, who was the group director of strategic partnerships and initiatives and was also the chairman of Equity Insurance agency and executive director at Equity Investment. Paul Gitahi, who was the managing director of South Sudan, has also left following the bank's decision to scale back its operations in the volatile country. The general manger for internal audit, Silas Gachanja, has also exited.
Mr Staley is credited for the rapid advancement of Equity Bank in the mobile banking sphere. He joined Equity Bank in 2009 as director of mobile banking and payment innovations, having resigned from the chief executive position at Credit Indemnity Bank, South Africa.
He has served in different capacities including as chief financial officer.