– If the rate caps are removed, banks would price loans depending on their own risk assessment
– The interest capping law was implemented following concerns raised by the public on the high cost of credit in Kenya
– Critics argue the cap has cut private-sector loan growth because banks have avoided lending to SMEs
The head of state instead asked Parliament to scrap commercial lending rate caps that critics say has contributed to the tough economic times in the country.
READ ALSO: Vatican launches KSh 11k rosary
The notice from State House for repeal of the law that imposes a cap on interest rates was sent to Parliament on Thursday, October 17.
The interest capping law became operational on Wednesday, September 14, 2016, and was implemented following concerns raised by the public on the high cost of credit in Kenya.
The Implementation of the law was expected to lower the cost of credit and increase access to credit.
Critics however, argue, the cap has cut private-sector loan growth because banks have avoided lending to customers deemed as risky, including small and medium-sized businesses as well as individuals who borrow for consumption.
In the 2019 Finance Bill, the National Treasury recommended scrapping the law, but members of the finance and national planning committee rejected the proposal and supported retaining the rate caps.
Do you have a groundbreaking story you would like us to publish? Please reach us through email@example.com or WhatsApp: 0732482690 and Telegram: Tuko news.
I forgave the person who destroyed my face – Kelvin Kairo | Tuko TV