Through the proposed amendment, the Kikuyu MP now wants to make sure that all charges relating to a loan are included when banks compute the maximum loan interest rate cap. Banks have been charging loan processing fees, insurance and negotiations fees to cushion themselves against the effects of the rate-capping law and maintain high interest incomes. Not regularisedThe lender claims that it charges a 7.5 per cent fee on the loans and not interest. For the 11 listed lenders, as at end of September last year, 14.6 per cent of their total profits came from loan processing fees. We as Central Bank have monitored to ensure banks are following this requirements and we have worked with the banks to go over loan by loan and we have seen that some are above 14 per cent.

Source: Standard Digital February 02, 2017 21:01 UTC