The president should turn his back on the banks and assent to the Interest Rates Bill

In 2009, an acquaintance borrowed 1.3M from a commercial bank and started repaying immediately. The arrangement was that he services this facility for six years in instalments of 40,000 a month. Two years down the line, he faced a personal challenge and could not service the facility for several months but later resumed the regular repayments. To cut the long story short, to date he has paid cumulatively approximately 3M and still owes the bank 1.4M.

This is a typical example of how rogue the banks have become. There are so many hidden costs and interest rates rated to borrowing including but not limited to charging interest on interest, penalty interest, account management interest and charges, annual interest on renewal among others. All in different versions to milk their customers dry. The saying that banks lend you umbrellas when it is dry and come for it when it is raining could not have been an exaggeration at all. The contrary can be said of cooperative societies. When you borrow from a Sacco, you can be sure that within 3 months of repayment, the principal amount begins reducing at an increasing rate. Yet Saccos also pay dividends to members and have operational costs. Therefore the commercial banks’ reasoning that they pay interest on deposits among others costs does not hold any water.