The public lecture organized by the Faculty of Law titled “Was the Law on Capping Bank Interest Rates Good or Bad” was facilitated by Kiambu MP Jude Njomo and Kenya Bankers Associated C.E.O Habil Olaka at CUEA’s Jubilee auditorium on Feb 21, 2017.
The debate between the benefit of the public from this law has brought about a lot of heat in the economy sector with some arguing that the banks are the greatest beneficiaries from this law, other than the common Mwananchi.
Hon. Njomo argued that most banks overcharge customers who are ignorant of their rights. The law is not static, therefore if the credit market changes then the law must change as well. He added that the charged interest rates are very high and this has played a role in high living standards in the country today.
However, Olaka said, the new law has stood between banks and credit flows to unsecured borrowers since lenders now see them as high risk customers. On the issue of high living standards, he denied the law playing part quoting that “the Law comes into question when the banks violate the set limit. But the banks are free to raise the interest as long as it is within the Law”.
This debate comes after President Uhuru Kenyatta signed into law a Bill capping bank interest rates at a maximum of 4% points above the Central Bank rate effective September 2016.