Kenya: The microfinance sector will benefit from the cap on interest rates, says bank CEO
Banks' interest rates are capped at four per cent above the central bank rate.The newly adopted law capping bank interest rates in Kenya will favour microfinance lenders, an industry executive has said.
Ireneus Gichana, the Chief Executive of Maisha Micro Finance Bank, told newspaper The Star that the new law presents a major growth opportunity for micro lenders since expected credit cuts will push borrowers to flock micro financiers.
“Microfinance banks now need to position themselves to go when banks begin the credit rationing,” he said.
In August, the Kenyan President
signed into law a bill capping bank interest rates at four per cent above the central bank benchmark rate.
Uhuru Kenyatta explained in a statement that the law will regulate applicable rates to bank loans and deposits thereby capping interests that banks can charge.
He said he acted to ease the frustrations linked to the cost of credit and the applicable interest rates on the "hard-earned" deposits of Kenyan people.