President Uhuru Kenyatta will this week make a decision regarding the Banking (Amendment) Bill, 2015 which intends to regulate interest rates that are applicable to banks’ loans and deposits.
“In regard to the Bill on proposed cap on interest rates that was passed by parliament, President Kenyatta is applying his mind and will pronounce himself later on in the week. There is nothing really to add at this point,” noted State House Spokesperson Manoah Esipisu.
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Analysts have cautioned that capping interest rates will eventually lead to the growth of informal lending cartels that charge high interest rates and shylocks.
The Central Bank of Kenya (CBK), while appreciating the underlying sentiments about the need to lower the overall cost of credit, also expressed concern over the adverse consequences of capping interest rates.
READ; Kenyan Banks Lending Rates Rise as at June 2016…
These, it noted , would include, inefficiencies in the credit market, credit rationing, promotion of informal lending channels, and undermining the effectiveness of monetary policy transmission.
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