– Kenya Bankers Association stated the provisions of Finance Act 2019 will not be abused
– The bankers also clarified that loan contracts entered before the repeal will not be affected by the new law
– Capping of rates pushed many Kenyans into the hands of loan sharks who charge steep interest on short-term loans
-This led to a high number of defaulters, most of whom have been adversely listed with Credit Reference Bureaus
Borrowers can now breathe a sigh of relief after local banks collectively assured that the scrapping of the interest rates cap will greatly benefit ordinary Kenyans and will not be abused.
In an advert published on Thursday, November 14, the Kenya Bankers Association (KBA) reiterated President Uhuru Kenyatta’s word that the removal simply sought to mitigate the negative effects of rates capping.
READ ALSO: Lawyer Ahmednasir says Raila could beat William Ruto in 2022 because of handshake
Kenya Bankers Association boss Joshua Oigara assured Kenyans will benefit from the removal interest rate cap in an advert on Thursday, November 14. Photo: Citizen TV.
READ ALSO: Facebook shuts down 5.4 billion fake accounts in 2019
One of the effects was an overall slowdown in bank lending to the private sector that has greatly impacted on businesses, particularly small and medium-sized enterprises (SMEs), as well as households. “Together, we will ensure that private sector development is supported through access to finance. More so, banks will continue to act responsibly by enhancing pricing transparency and supporting enterprise development and the SME sector through such innovations as the Stawi product, which offers competitively-priced digital loans for micro and small-business owners,” the association stated in a statement signed by chairman Joshua Oigara, who is also the KCB managing director. Borrowers were treated to even more glad tidings as bankers clarified that all existing loan contracts entered before the repeal of the cap on Thursday, November 7, will not be in any way affected by the new law.
There have been fears that the repeal of caps would trigger upward adjustment of interest rates among local lenders, signaling the death of cheap credit.President Uhuru Kenyatta signed the Finance Bill 2019 into law on Thursday, November 7. Photo: State House. Source: FacebookSome leaders have also been misleading Kenyans that bank customers with pre-amendment loans will also be subjected to the new lending regime.When he asked lawmakers to remove the […]