Kenyans to get cheaper loans as Uhuru signs Banking law

President Uhuru Kenyatta signing into law the Banking (Amendment) Bill, 2015 at State House, Nairobi.

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By Moses Michira

Lending rates will fall by more than a third after the enactment of a new law that seeks to slash the cost of credit, while handing savers better returns. Once the new law becomes operational, banks are allowed to charge a maximum of 14.5 per cent on loans, down from over 20 per cent.

This comes into play after President Uhuru Kenyatta signed into law proposals by the National Assembly meant to protect frustrated borrowers who have been at the mercy of lenders. He defied threats from bankers and economists of harmful consequences of the law, promising to deal with the repercussions as they come. Uhuru said in a statement issued yesterday that he had “consulted widely” before giving his assent to the amendments passed by the National Assembly last month.

“Since receiving this Bill, I have consulted widely and it is clear to me from those consultations that Kenyans are disappointed and frustrated with the lack of sensitivity by the financial sector, particularly banks,” said Uhuru.

He added that the frustrations suffered by ordinary citizens were tied to the high cost of credit and low returns on savings.

“I share these concerns,” the President said in agreement with millions of ordinary Kenyans, in reference to the low returns paid to savers on their “hard-earned deposits”.

“This a good move that works in the best interest of majority of Kenyans. “I was worried when the President took long to assent to the Bill after my personal advice and those of experts but I say kudos to the bold move,” said Raila moments after the Bill was signed into an Act of Parliament.

While congratulating Uhuru, Raila described his step as a patriotic move that should have been implemented by previous regimes, and which will go a long way in alleviating the suffering wananchi have been subjected to. Raila argued the economy was grinding to a halt, with a high number of defaulters reported while banks raked in super profits. “Many borrowers are choking with loan arrears and accumulated interest charges because of high costs of lending, and that is bad for the economy,” added Raila.

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