If you took a loan before November 7 and worried that the new law reversing, capping of interest rates would hit you, stay calm.
The Kenya Bankers Association said any adjustment on loan interest would affect loan contracts signed before the November 7.
In a statement, Kenya Bankers Association Chairman Joshua Oigara reminded lenders that while the Finance Act 2019 has removed the interest rates ceiling, it has introduced an amendment stipulating that all existing loan contracts be maintained under same terms, including interest rates.
“The terms and conditions on existing loan contracts before the repeal on November 7 should not change for the duration of each contract,” Oigara said.
“We recognise the concern raised by members of parliament regarding how the industry will respond to the removal of the interest rate controls and would like to assure the banking public that banks will abide by the law,” he added.
He added that banks will continue to act responsibly by enhancing pricing transparency and supporting enterprise development and the medium and small-medium enterprise sector through such innovations as the Stawi product.
President Uhuru last week signed into law the Finance Bill, 2019 scrapping the law capping commercial bank interest rates at four per cent above Central Bank rate.
The new law also introduces a tax on income raised from the digital marketplace as a measure of ensuring equity in taxation.
According to PSCU statement, the repeal of section 33b of the Banking Act is expected to enhance access to credit by the private sector especially the Micro, Small and Medium Enterprises (MSME's) as well as cut out exploitative shylocks and other unregulated lenders.
“As part of government efforts to support the affordable housing pillar of the Big 4 Agenda, the Finance Act 2019 exempts the National Housing Development Fund from income tax.”
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