This archive report was first published on 27 November 2019.
On November 27, 2019, Central Bank of Kenya (CBK) Governor Patrick Njoroge cautioned banks against taking advantage of the repeal of the interest rate cap to extort borrowers.
Speaking after the Monetary Policy Committee (MPC) meeting, Njoroge emphasized the need for lenders to focus on medium-term gains rather than prioritizing short-term profits.
He noted that the regulator had advised banks on how to operate without hurting consumers, and warned against a return to the 'wild west banditry' of overpricing loans during the pre-rate cap period.
According to Njoroge, the CBK had allowed banks to price their interests at a maximum of 4% above the benchmark rate before the repeal of the interest rate cap.
He attributed the country's economic difficulties in 2019 to the interest rate cap, which he said had compelled the economy to perform below its potential.
"The year 2019 was a difficult year...maybe we have had other years before. However, first and foremost, the issue of interest rate cap affected us. We lost so much," said Njoroge.
He urged banks to be responsible and focus on serving Kenyans, rather than prioritizing profits.
"This time will be different in terms of the way the banks will react. They are not going back to the same old ways, the wild west kind of banditry. No, they need to be responsible. We have explained to them the way they should work," he explained.
