Since the interest rate capping law came into force, it meant survival would be literally for the fittest. With depositors having little confidence in smaller institutions, the microfinance banks struggled for liquidity and increasingly relied on mainstream banks, private equity and other lines of credit to meet the demands of customers. As a result, their loans were substantially more expensive than those of mainstream banks. Since the interest rate capping law came into force, it meant survival would be literally for the fittest. However, in a market where banks are mostly lending to government and earning fees on delivering public services, this is overly optimistic.

Source: Daily Nation April 29, 2019 22:07 UTC