By LYNET IGADWAHMore by this AuthorThe Treasury has committed to the International Monetary Fund (IMF) that it will repeal or reform the 18-month-old law capping interest rates in what could set the stage for expensive loans. Treasury secretary Henry Rotich told the Financial Times on Friday that he will review the cap on bank lending rates that has resulted in a massive fall in loans to the private sector. The government in September 2016 capped commercial lending rates at four percentage points above the central bank’s benchmark rate, which stands at 10 per cent, and put a minimum deposit interest rate of 70 per cent of the benchmark. Bankers say they’ve closed some branches, laid off staff and seen their loan book growth slow in response to the cap. President Uhuru Kenyatta signed into law the Banking (Amendment) Act 2016 at a time when the average interest rate stood above 18 per cent, a level seen as unaffordable for the dominant SMEs.

Source: Daily Nation February 26, 2018 06:22 UTC