Cord leader Raila Odinga has asked President Uhuru Kenyatta to sign the bill that caps bank’s interest rates at 4 per cent above the Central Bank rate without further delays.
The ODM leader said the signing of the Bill into law will save millions of Kenyans suffering in the hands of a barely controlled banking regime.
“We expect the President to act in the interest of suffering Kenyans and sign this Bill into law without further excuses and unnecessary delays,” Raila said in a statement to the press on Sunday.
The Banking (Amendment) Bill, 2015 seeks to cap the banks’ interest rate at not more than 4 per cent above the Central Bank Rate, which currently stands at 10.5 per cent.
He said banks cannot be trusted to effect a reduction of the interest rates on their own with the clients in mind, having failed the test after the country adopted the root of persuasion trusting that banks will act.
Raila said the high interest rates have been occasioned by the high level of borrowing by government.
He said the Bill has come at a good time, adding that: “Interest rates have been pushed up particularly by increased borrowing from the domestic market by the government, something Jubilee promised not to do,”
Raila chided the Jubilee’s over its borrowing habits, especially from the local market, saying it has turned out to be higher than that of any regime in the last 10 years.
“This has pushed individuals and corporations out of competition for money from banks, which has in turn slowed economic activity,” Raila said further praising Mps for being patriotic in their push to save Kenyans.
The Opposition leader said: “High commercial lending rates, often around 18 percent or more, have stifled businesses and particularly killed upstarts like youth projects,”
“A law has therefore become necessary to respond to the pain of our citizens,” Raila said.
He said the trend of investors relocating to neighbouring countries with better rates was worrying adding that banks cannot be trusted with self-regulatory measures that have been proposed before.
Read: How attractive interest rates set stage for banks’ market share war
“None other than the governor of the Central Bank Patrick Njoroge has admitted that lending rates are too high and that banks should be persuaded to lower them,” Raila said.
We have in the past adopted this root of persuasion and trusted banks to act in the interest of clients and would be clients. But banks have failed the test.
The bill awaits the presidential assent – something Raila says is the best solution as banks struggle to cut themselves a large piece of the market share.
The bill has met opposition