NAIROBI, Kenya, Aug 27 – A fresh attempt by Deputy Minority Leader Jakoyo Midiwo to cap bank interest rates flopped after the Budget and Appropriations Committee opposed it saying it was unconstitutional.
The committee chairman Mutava Musyimi said the proposed amendments to the Finance Bill went against Article 114 of the Constitution and asked Speaker Justin Muturi to decline it.
Musyimi said any changes to a Finance Bill must be approved by his committee after taking the views of the National Treasury, the Central Bank of Kenya and other stakeholders in line with the Constitution.
“The committee was not seized of the proposal by Midiwo in time. This amendment would require recommendations of the Treasury and Central Bank of Kenya,” he said.
House Speaker Muturi ruled that the Midiwo amendments will not be considered when the House moved into the Committee of the Whole House. This is where the House scrutinises, debates and votes on proposed amendments by MPs.
Midiwo protested the move to drop his amendments citing that they would not increase additional expenditure on public funds.
“I have been on issue of interest rates since 2005. If it’s the view of the Budget Committee that we need to engage, I am willing and ready. Something should be done about interest rates charged on the people of Kenya. My amendment doesn’t occasion any additional expenditure on public money but gives Kenyans money they are being robbed by banks,” he said.
In his amendment, Midiwo wanted banks’ lending rates capped at 16 percent based on the current benchmark rate of 11 per cent should the Bill be approved into law.
The Deputy Minority Leader also wanted banks or financial institutions to pay depositors not less than 70 percent of the base rate published by CBK.
A similar effort to regulate the lending rate failed in 2001 when the High Court ruled that an Act capping the lending rate was unconstitutional.