This archive report was first published on 14 November 2019.
Kenya's banking sector has been put at ease following the repeal of the interest rate cap law. The Finance Act 2019, signed into law by President Uhuru last week, removed the cap on commercial bank interest rates, which was set at four per cent above the Central Bank rate.
Kenya Bankers Association Chairman Joshua Oigara has reassured lenders that banks will abide by the law and not interfere with existing loan contracts signed before November 7. In a statement, Oigara reminded lenders that while the Finance Act 2019 has removed the interest rates ceiling, it has introduced an amendment stipulating that all existing loan contracts be maintained under the same terms, including interest rates.
“The terms and conditions on existing loan contracts before the repeal on November 7 should not change for the duration of each contract,” Oigara said. He added that banks will continue to act responsibly by enhancing pricing transparency and supporting enterprise development and the medium and small-medium enterprise sector through innovations such as the Stawi product.
The repeal of the interest rate cap law is expected to enhance access to credit by the private sector, especially the Micro, Small and Medium Enterprises (MSME's), as well as cut out exploitative shylocks and other unregulated lenders. The new law also introduces a tax on income raised from the digital marketplace as a measure of ensuring equity in taxation.
According to the President's office, the Finance Act 2019 also exempts the National Housing Development Fund from income tax, as part of government efforts to support the affordable housing pillar of the Big 4 Agenda.
Published on November 14, 2019, 1:01 pm
