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How ‘vague’ law made saccos cut loan interest rates

Post Bank headquarters banking hall on 16th September 2016. PHOTO:WILBERFORCE OKWIRI

Demand for cheap credit from customers prompted micro-finance institutions to cut the cost of lending despite being exempted from the rate cap law.

According to a policy research paper commissioned by the World Bank (WB) on request from the Central Bank of Kenya, the unclear wording of the interest rate cap law opened a window for customers to demand that savings and credit cooperative organisations (saccos) and micro-finance institutions (MFIs) cut interest rates on loans

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