Now Rotich changes tune on rate cap law
SEE ALSO :All eyes on governor's magic fix“We are looking at collateral management, judicial reforms and the environment for lenders to get a fair treatment to reduce the cost of loans and follow-up on securities. Currently, it’s costly and banks get a lot of injunctions which complicate the whole process,” said the CS. His stance is a shift from the approach he took last year when he sought to repeal the law through the Finance Bill 2018. At the time, the Government was under intense pressure from the International Monetary Fund (IMF) to scrap the law or lose a currency insurance loan which was allowed to lapse after the CS failed to deliver. MPs rebuffed the push by Treasury in a tussle that saw the entire section thrown out and a modest reform negotiated to remove the floor, a 70 per cent of the Central Bank Rate charge on deposits. However, analysts have pointed out that this move has had a minimal impact on the banks since they were not rewarding depositors under the rate cap law anyway. “The floor did not have an impact since banks had done a relocation of fixed income to accounts that did not attract the charge. We saw banks like KCB and Stanbic, which have a huge chunk of corporate clients, restructure how they categorise different deposits,” Genghis Capital head of research Joy D’Souza.