Kenya lawmaker proposes increase in commercial lending rates

A Kenyan lawmaker, Moses Kuria, has proposed raising a cap on bank interest rates to six percentage points above the central bank’s policy rate.

Moses Kuria, a ruling party Member of Parliament, this will  increase lending to small and medium-size enterprises.

The cap which is currently at four percentage points above the policy rate, was fixed in September 2016 after lawmakers accused banks of overcharging borrowers.

Moses Kuria, said his amendment to banking laws would keep the cap at 4 points above the policy rate for “low-risk clients”, but introduce “a risk negotiation window” of up to 6 points for individuals and small and medium-size companies perceived as risky.

An attempt by finance minister Henry Rotich to repeal the cap, after it was partly blamed for a drop in private-sector credit growth, in June last year, was blocked by lawmakers.

Amendments usually take time. Kenyan laws state that a lawmaker proposing them must draft a bill and submit it to parliament for referral to the relevant committee.