You can share this on


Legislators have accused commercial banks of trying to blackmail Kenyans in their push to have the law regulating lending rates repealed.

While debating amendments to the rate cap law yesterday, the MPs said banks were still hugely profitable even under the rate cap regime.
Among the concerns MPs raised was what assurance the country would have that banks would start lending to small businesses if the regulations were removed.
Commercial banks are hardly lending to the private sector, citing that the risk is too high to lend at a rate determined by the law.
According to the Central Bank, starving credit to businesses and individuals has seen a major slowdown in the productive sectors of the economy.
Many startup businesses have either scaled down their operations or closed.
In the amendments tabled by Jude Njomo – who also sponsored the original regulations that came to effect in 2016 – the MPs are seeking to remove ambiguities in the law as directed by the courts.
For More of This and Other Stories, Grab Your Copy of the Standard Newspaper.
Njomo has also proposed that all lenders must get the information of their clients’ next of kin who would be automatic beneficiaries of the money left in bank account should the holder die.
“The same banks have gone to court to challenge these amendments, yet they don’t want to keep a record of an account holder’s next of kin,” Njomo said.
His amendments, which were discussed in the Second Reading yesterday, received support of several legislators, many citing that banks must be controlled because they are “greedy”.
Njomo also took a swipe at Patrick Njoroge, Governor of the Central Bank of Kenya, for trying to usurp the powers of Parliament to push a repeal of the rate cap.
Njoroge has advocated the repeal of the law, arguing that as an economist, he knows the law discourages banks from lending to borrowers considered as having a significant risk profile of default.
“As a house we should not be seen to be working for banks but our people who are being oppressed by banks, which are making abnormal profits,” Njomo said.
A High Court had in March ruled that some sections of the Central Bank Act amended to allow Parliament to make laws regulating interest rates were “vague, ambiguous and imprecise”.
MPs were allowed 12 months to make the changes in the amendments currently before Parliament.
Among the uncertainties highlighted was one that applies as the base rate on which lending rates are pegged.
It was intended that the Central Bank Rate, currently at 9 per cent, is applicable with banks allowed to load a 4 per cent profit margin on loans.

We are undertaking a survey to help us improve our content for you. This will only take 1 minute of your time, please give us your feedback by clicking HERE. All responses will be confidential.

Related Topics
commercial banksblackmail

!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘323941174965407’);
fbq(‘track’, ‘PageView’);

!function(f,b,e,v,n,t,s)
{if(f.fbq)return;n=f.fbq=function(){n.callMethod?
n.callMethod.apply(n,arguments):n.queue.push(arguments)};
if(!f._fbq)f._fbq=n;n.push=n;n.loaded=!0;n.version=’2.0′;
n.queue=[];t=b.createElement(e);t.async=!0;
t.src=v;s=b.getElementsByTagName(e)[0];
s.parentNode.insertBefore(t,s)}(window, document,’script’,
‘https://connect.facebook.net/en_US/fbevents.js’);
fbq(‘init’, ‘2092594837535172’);
fbq(‘track’, ‘PageView’);
(function(d, s, id) {
var js, fjs = d.getElementsByTagName(s)[0];
if (d.getElementById(id)) return;
js = d.createElement(s); js.id = id;
js.src = ‘https://connect.facebook.net/en_US/sdk.js#xfbml=1&version=v3.1&appId=1601457996848009&autoLogAppEvents=1’;
fjs.parentNode.insertBefore(js, fjs);
}(document, ‘script’, ‘facebook-jssdk’));



Visit Original Source link

You can share this on