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Capping bank rates good for ordinary Kenyans

UREPORT
By Joseph G.Muthama | August 17th 2016

The Banking (Amendment) Bill, 2015 has elicited mixed reactions among Kenyans.

Notably, there are those who are advocating for market forces of supply and demand to operate while others are advocating for regulation of interest rates by Government.

It is understandable that since the Central Bank of Kenya launched a new formula popularly known as Banks Reference Rate (KBRR), which was meant to bolster high interests rates and to act as guideline for commercial banks to price their loans for borrowers, the lending rates have continued to soar unabated.

Worse, it is regrettable that the KBRR has not been adhered to by many commercial banks, hence the astronomically high interest rates. It is now an open secret that many commercial banks' borrowing rates are ranging from 16 to 22 per cent or more.

In an effort to redeem their tarnished name and image, now the banks have embarked on a charm offensive with Sh30 billion concession for small and medium Enterprises (SME) while others have dropped account closure charges with immediate affect.

The current high bank rates are a huge impediment to the Vision 2030 blueprint. The buck stops with President Uhuru Kenyatta.

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