Connect with us

Hi, what are you looking for?

Capital Business
Capital Business
Acting Finance Minister Njeru Githae

Kenya

Banks dig in to fight off rates caps

Acting Finance Minister Njeru Githae

NAIROBI, Kenya, Mar 15 – A standoff continues between local financial institutions and Members of Parliament (MPs) over the delayed Finance Bill that proposes to introduce regulation of interest rates.

Following an unfruitful meeting on Thursday, between the banks, MPs and acting Finance Minister Njeru Githae, Gem MP Jakoyo Midiwo, who introduced the amendment on interest rate caps said the matter would continue onto the Parliamentary floor for debate.

“The banks have refused to give us a solution to the Kenyans who negotiated their loans at 10 or 15 percent but now they are charged at 30 percent. I am not going to be withdrawing my amendment to cap interest rates,” he asserted.

The amendment seeks to cap the lending interest rates at no more than four percent above the Central Bank Rate (CBR) and deposit rates at 70 percent of the CBR.

Githae said the meeting however agreed that banks would be required to show their average weighted costs of deposits and funds every month to ensure transparency.

In addition, borrowers will be able to negotiate extension of loan payment periods, and liquidate loans prematurely without penalty, while interest rates on mortgage loans will now be held at a maximum of 19 percent.

Consumer loans however were noticeably left out of the agreement; to which Midiwo added that banks have acknowledged at least 70 percent of borrowers have been affected by the high rates.

Interest rates skyrocketed to 32 percent last November after the fourth round of hikes by banks since June 2011.

Githae said the move to cap interest rates is not the solution to giving consumers some reprieve from the interest rates, as it will lock out a large section of Kenyans, especially the low income bracket.

He added that the new measures will be enforced through the Central Bank of Kenya Governor’s Circulars until they can be anchored in law.

Advertisement. Scroll to continue reading.
Click to comment
Advertisement

More on Capital Business

Executive Lifestyle

NAIROBI, Kenya, Mar 12 – The country’s super wealthy individuals are increasing their holding of bonds, gold and cash, a new report by Knight...

Ask Kirubi

NAIROBI, Kenya, Mar 9 – Businessman and industrialist Dr. Chris Kirubi has urged members of the public to exercise extreme caution when making any...

Ask Kirubi

NAIROBI, Kenya, Mar 24 – Businessman and industrialist Dr. Chris Kirubi is set to own half of Centum Investment Company PLC, following a go-ahead...

Headlines

NAIROBI, Kenya, Mar 18 – Commercial Banks have been ordered to provide relief to borrowers on their personal loans, with loans eligible from March...

Ask Kirubi

It is without a doubt that the COVID-19 pandemic has caught the whole world by surprise. Although its full impact is yet to be...

Kenya

NAIROBI, Kenya, Jun17 – Kenya’s tea leaves manufacturer Kericho Gold, has been awarded the Superbrands Seal by Superbrands East Africa for their quality variety...

Coronavirus

NAIROBI, Kenya, Apr 13 – As the local telecommunications industry gears up to roll out 5G networks in the country, the Communications Authority of...

Coronavirus

NAIROBI, Kenya, Mar 22 – Airtel Kenya is offering free internet access for students in order to enable continued learning at home in the...