Today Kenya bank CEO’s met with the Central bank governor. They again stated their opposition to the interest rate capping act from parliament in an innovative and free market country, and urged the urged the president to refer the bill back to parliament for more consultations. They noted that between 35% to 44% of new loans would be locked out due to their risk classification.
They also announced a raft of measures to assuage customer dissatisfaction with the banking sector including:
- A commitment to reduce interest rates in line with the KBRR (The Kenya Banks’ Reference Rate which was reduced from 9.87% to 8.9%) on July 25, 2016
- Cancellation of account closing charges.
- A commitment to set aside Kshs 30 billion to finance small & medium enterprises, of which Kshs 10 billion would go to women and youth-owned micro enterprises – at not more than 14.5%. The allocation of each bank will be tracked and reported on a quarterly basis from November.
- A commitment to classify customers at credit reference bureaus as low, medium and high risk and align interest rates to match such borrowers.
- Re-launching the cost of credit web site to include bank loan data enabling loan applicants to easily compare bank products
- Promoting alternative dispute resolution.
These are all things banks should have been doing, but were not. The statement also noted that the banks pay Kshs 69 billion per year in taxes (corporation, excise, PAYE) and that the new bill would reduce income to the government by at least Kshs 17 billion. But this is at a time when Safaricom alone paid Kshs 63 billion to the government as taxes and licence fees.
$1 = Ksh 101