Raila urges President Kenyatta to assent to interest rate Bill

Raila urges President Kenyatta to assent to interest rate Bill

CORD leader Raila Odinga has called on President Uhuru Kenyatta to sign into law a Bill that seeks to cap banking rates.

In a statement to media houses on Sunday, Raila thanked Members of Parliament for passing the amendments to the Banking Act saying the ball is now in President Kenyatta’s court.

“This Bill comes at a time when interest rates have been pushed up particularly by increased borrowing from the domestic market by the government, something Jubilee promised not to do,” read the statement in part.

He blamed the Jubilee Government for causing interest rates to go through the roof due to local borrowing, adding that a reversal of the rates would be beneficial to local businesses.

“The Jubilee Government’s borrowing from the local market is 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.”

“High commercial lending rates, often around 18 percent or more, have stifled businesses and particularly killed startups like youth projects. High interest rates, like the cost of power, have forced some investors to relocate to neighbouring countries with better rates.”

The Bill, sponsored by Kiambu Member of Parliament Jude Njomo, seeks to cushion borrowers from the high lending rates that have been an impeding factor for individuals interested in taking loans.

With the CBR currently at 10.5 percent, the move could see interest rates set at a maximum of 14.5 percent down from the industry average of 19 percent.

The bill further guarantees a minimum interest rate of at least 70 percent of the base rate set by CBK for customer deposits.

Kenya Bankers Association (KBA) has however expressed their opposition to the Bill saying the move to cap interest rates will force banks to deal with individuals and institutions deemed to have a better credit score, locking out millions of Kenyans.