The National Assembly of Kenya has today accepted the terms of the executive and voted to repeal the law capping interests rates in the Finance Bill 2019.
Kenyans will now have to brace themselves for high interest rates from banks as mobile lenders and shylock exits the market due to stiff competition from banks.
The banking lobby group Kenya Bankers Association (KBA) has over the months campaigned for the rate cap to be removed citing that the objective of the law to spur credit growth in the market especially to unsecured individuals, micro, small and medium enterprises has not been realised.
The KBA CEO Habil Olaka sent a memorandum to paliament in August supporting the repeal of the law capping interest rates.
“The proposed repeal will address the challenge of many individuals accessing high cost of credit from nonbank lenders after being pushed out of the banking system by the law,” the memorandum said.
That time, KBA assured Kenyans that the interest rates on existing loans will not be increased if the law is repealed. However, noting a track record of deceit by banks, parliament stuck to its guns and did not repeal the law.
The bill was later not signed by President Uhuru Kenyatta who returned it for debate. Now, the MPs have accepted to remove the cap on interest rates and the law will be signed to law by Mr. Kenyatta any moment now.
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