President to receive Bill seeking to cap interest rates

President Uhuru Kenyatta will this week receive the Banking (Amendment) Bill, 2015 for assent.The President will either accept or reject the Bill that promises Kenyans cheaper credit from banks.

Once he receives it, Uhuru will have 14 days to either sign or reject it by sending it back to Parliament.

If the President agrees with the provision to cap interest rates, ordinary Kenyans and MPs pushing for its enactment will feel vindicated.

If he rejects the provisions, he will send the Bill back to Parliament, with reasons, which he hopes will convince the lawmakers.

If the President’s explanation does not convince, the MPs, some of whom are re-paying huge loans, could raise a two-thirds majority veto and overturn the decision.

State House yesterday said the President does not intend to keep Kenyans guessing on the fate of the Bill for longer than necessary.

The bill proposes a ceiling on loans at no more than four per cent of the Central Bank of Kenya’s recommended rate.

State House spokesman, Manoah Esipisu, said Uhuru had been keenly following the debate on the matter and his decision will be made within the time frame provided for in law.

“The President will pronounce himself within the time frame. He has not been staying idle. He is proactive and has been following the debate around the Bill,” said Mr Esipisu.

COMMON MAN

On the streets, Kenyans have been giving stories of how simple loans meant to turn around their fortunes, educate their children and build homes turned them into paupers.

In Parliament, MPs last week said they did not trust banks even after they offered concession that would see them set aside Sh30 billion for Small and Medium Enterprises (SMEs) in the country.

Interestingly, both banks and MPs claim they are fighting for the interests of consumers.

“The principal object of this Bill is to provide a mechanism for regulation of banks and financial institutions’ rates through the introduction of ceilings.

The Bill proposes to put a cap on the rate of interest charged for loans and to fix the minimum rate of interest that such institutions must pay on deposits held,” reads the Bill by Jude Njomo (Kiambu Town).

The banks, through the Kenya Bankers Association have a different view: “At first glance, capping interest rates looks like something that will benefit consumers; however, on the contrary, it will disadvantage the very consumers it seeks to protect.

If Parliament is successful with this Bill, we will be taking material steps backwards as a democracy. The divide between those with means, and those without access to finance due to their income levels, will be further entrenched.”

“We expect serious application of his mind because it is a serious matter,” State House responded yesterday.