The Treasury is planning a forum to discuss whether Kenya should alter the law on bank interest rate cap once a report showing the impact of loan costs control is ready.
Treasury secretary Henry Rotich said banking sector stakeholders will discuss the cap amid opposition from a consumer lobby and some lawmakers to have a Bill alter interest rate controls.
“Of course we are seeing the credit to the private sector has decelerated drastically and we are monitoring the impact of this and we will take appropriate action, including discussing with all stakeholders,” Mr Rotich said when asked about the Treasury’s position on rate cap.
That report we should be finalising soon and will form the basis for debate on how to deal with issues of the interest rates.” A year ago, the government capped commercial lending rates at four percentage points above the central bank rate, which stands at 10 per cent, and also imposed a minimum deposit rate of 70 per cent of the benchmark rate.
This caps lending rates at 14 per cent. The government said bankers were hurting consumers by charging more than 20 per cent interest rates on loans.
Bank bosses, who deny the claims of exploitation, say the cap has cut lending to risky borrowers like small enterprises, curbing economic growth.