MP launches new bill to reduce Kenyan bank interest rates
MP Martin Ogindo wants a law to be passed in Kenya that will prevent banks from charging customers excessive lending rates.Member of Parliament Martin Ogindo wants a law to be passed in Kenya that will prevent banks from charging customers excessive lending rates.
He has sponsored a new bill it is hoped will make it impossible for financial institutions to introduce interest of more than 400 basis points above the Central Bank Rate (CBR), Business Daily reports.
Currently, some banks are charging as much as 22 percent on loans, something that could prevent many individuals and enterprises from accessing the finance they require.
Stephen Mutoro, Secretary General of Consumer Federation of Kenya, welcomed the move as it will help to protect consumers if it comes into force.
"Banks cannot be said to be an open market. They have many safeguards against very low public accountability and must be regulated," he stated.
If the bill is passed, financial institutions will be able to charge maximum interest of 15 percent on loans, as the CBR currently stands at 11 percent.
Last month, Business Daily quoted Director of Consumer Banking at Barclays Bank Abdi Mohamed as saying the introduction of branchless initiatives in Kenya will help to bring down the cost of banking in the country, making it more accessible for citizens.