NAIROBI, KENYA: The government has ruled out reversing interest rate cap law blamed on reduced credit to the private sector by many banks.
Deputy President while appearing for an interview on a local television station urged institutions calling for the reversal to instead change their business model and cut on their expenses.
“We believe in free market, we believe that our financial institution have not been responsible in lending. And we believe that it is possible to do business with interest rates as low as 10 per cent,” he said.
“So we believe it is unjustified for anybody to tell us that at 14 percent which is current rate that there is serious institution that cannot do business,” Ruto added.
He noted that the new law has been implemented elsewhere and worked and that the government will not heed to the reversal calls.
Banks have been pilling pressure on the Government to scrap interest rate controls, saying they have reduced credit to the private sector and failed to increase savings, as anticipated.
The lenders, under the aegis of the Kenya Bankers Association (KBA), in March released a survey conducted in January and February that polled 1,884 people to back up their claims.
“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,” said KBA Chief Executive Habil Olaka