Commercial banks have remained adamant on the issue of control of interest rates by parliament. Gem MP Jakoyo Midiwo sparked the interest rates debate with his bid to amend the Finance Bill to insert a clause that sets a base for deposit rates and a cap on lending rates.
The proposed bill states that the maximum interest rate that a bank or a financial institution may charge for a loan or monetary advance shall not exceed by more than four per centum, the rate set and published by the Monetary Policy Committee. It also proposes to have the minimum interest rate paid by bank or a financial institution on deposits held in interest earning accounts at at least seventy per centum of the base rate set and published by the Central Bank of Kenya.
Mr Githae has been pushing banks to lower interest rates to a level that can convince the legislators to adopt a more acceptable situation when he tables the Bill more likely on the 17th of April.
The proposal to have a minimum rate on deposits and cap interest on borrowing is a welcome move by Kenyans and MPs. Most of the MPs with loans are likely to pass the Bill with the new amendments.
Read more on the solution offered by banks to convince legislators to drop their quest to control interest rates here