Bankers concerned over MPs' move to pass Bill to cap interest rates

The Kenya Bankers Association (KBA) has raised concerns after the National Assembly passed a Bill that seeks to cap bank interest rates, at not more than four percent, above the Central Bank Rate (CBR).

This aims at taming runaway cost of borrowing.

Through its Chief Executive Officer Habil Olaka, KBA says the Bill will greatly affect SMEs and the entire Kenya's economy, for it will reduce borrowing rates, yet loans are highly depended by a number of Kenyans.


Addressing the press, Olaka said banks have not doubled loan rates and blamed it on the cost of funds for banks, saying they have almost doubled, translating to higher loan interest rates.

KBA has now called on Parliament to consider reviewing the Bill, saying the Association is committed to partner with the legislature, the Central Bank and the National Treasury to control the interest rates.

In the Bill which was passed on Wednesday and sponsored by Kiambu MP Jude Njomo, chief executive officers of commercial banks and other lending institutions will be fined one million shillings or be imprisoned for a term of not less than a year or both, if convicted of flouting the law.

Commercial banks have been constantly accused of hiking interest rates whenever they see market signals but fail to cut them down.

MPs have since asked President Uhuru Kenyatta to quickly sign the Bill into law to protect Kenyans from high interest rates.