Why Kenyan banks want rate cap law scrapped

Kenyan banks now want the government to scrap interest rate controls on grounds that it has reduced

___6413143___https:______static.pulse.com.gh___webservice___escenic___binary___6413143___2017___3___23___7___CBK

According to the Kenya Bankers Association (KBA), the new law had made it difficult for banks to lend even though it had not affected the saving and borrowing patterns.

“The solution is not to tweak the law, but to remove it and consider some proposals to make credit accessible. We know these problems and we are trying to address them,” KBA Chief Executive Habil Olaka said on Wednesday.

The lenders conducted a survey between January and February to prove their allegations stating that people had a difficult time to access loans.

“There is mounting evidence the interest rate cap introduced in September 2016 dampened growth in quarter four and at the start of this year,” a member of the association added.

President Uhuru Kenyatta introduced caps on lending rates in August in a bid to fulfil a campaign pledge he made before coming to power in 2013 that he would lower the cost of loans.

In January 2017, the International Monetary Fund (IMF) asked the Treasury to remove bank interest rate caps stating that it posed a risk to financial stability in the country.

“The macroeconomic outlook is overall positive, including robust growth and reduced external imbalances. However, interest rate controls are likely to reduce access to credit, weighing on growth,” the IMF said in a statement.

The banks have been urging the government to make changes to the law since its implementation in 2016.

JOIN OUR PULSE COMMUNITY!

Unblock notifications in browser settings.

Eyewitness? Submit your stories now via social or:

Email: news@pulselive.co.ke

Recommended articles

Police change tune on main suspect in Mirema murder

Police change tune on main suspect in Mirema murder

I am not the owner of the company - Tabitha Keroche reveals in court

I am not the owner of the company - Tabitha Keroche reveals in court

Raila Odinga unveils his national campaign point men [Full List]

Raila Odinga unveils his national campaign point men [Full List]

Reprieve for billionaire Humphrey Kariuki as court quashes Sh17 billion tax case

Reprieve for billionaire Humphrey Kariuki as court quashes Sh17 billion tax case

 I'm not going for any elective post - Alfred Mutua addresses speculations

I'm not going for any elective post - Alfred Mutua addresses speculations

Green Park terminus: Payment of Sh650 million to pensioners delayed

Green Park terminus: Payment of Sh650 million to pensioners delayed

Kenya Air Force invites Kenyans to one-of-a-kind air show festival

Kenya Air Force invites Kenyans to one-of-a-kind air show festival

Igathe finally responds to viral memes

Igathe finally responds to viral memes

Sonko breaks silence over allegations of neglecting his 15-year-old daughter

Sonko breaks silence over allegations of neglecting his 15-year-old daughter