Bank and microfinance numbers for up to February this year show that lenders continue to shun small firms. Private sector credit grew just 2.1 per cent in the year to February, well below CBK’s target rate of 12-15 per cent. “Banks stopped giving lower ticket loans and then the people who were borrowing started seeking top-ups or refinancing. Decline in earnings“Decline in earnings over time may pose risks to financial stability through reduced capacity to build capital buffers to absorb shocks,” said Dr Njoroge. “The removal of interest rate caps is critical to developing a market-led financial sector; however, the banking sector must fully demonstrate that it is responsible and disciplined,” said Dr Njoroge.

Source: Daily Nation April 17, 2018 08:15 UTC