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KTN Prime 13th September 2016: Implementation of the new CAP on interest rates starts tomorrow 14th

13th September, 2016

September the 14th 2016, is the first day  for the implementation of the new cap on interest rates in Kenya, and in a move that is expected to further muddy the waters, the Central Bank of Kenya has finally clarified that all banks, should use the central bank rate or CBR, as the point of reference when applying the newly enacted banking amendment act of 2016. According to the statement from the CBK, the prevailing interest rates as implied by the law are thus 14.5% for the lending rate and 7.35% for the interest rate on deposits. There has been an ongoing debate as to whether the CBR, now at 10.5 per cent, or the Kenya banks reference rate (KBRR), currently at 8.9 per cent, is the implied base rate. The statement read in part and here i quote, “for purposes of section 33b of this (banking (amendment) act, 2016, the base rate is the central bank rate (CBR). This is in line with section 36(4) of the central bank of  Kenya act,” end qu