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The Kenyan Banking (Amendment) Bill was finally signed-off by President Uhuru Kenyatta Wednesday afternoon – after two previous attempts were quashed for lack of details.
On July 28, 2016 the Kenya’s National Assembly passed the Banking (Amendment) Bill that was envisioned to regulate interest rates that are applicable to banks’ loans and deposits as well as to cap the interest rates that banks can charge on loans and must pay on deposits.
The push to cap rates was the third time that the parliament was attempting to reduce interest rates to affordable levels, and this time that quest has succeeded, and now awaits the implementation.
In the previous two attempts, several dialogue and promises of change prevailed and banks avoided the introduction of those caps like plague, as similarly witnessed this year since Kiambu Member of Parliament Jude Njomo tabled the bill in parliament.
The first attempt was in 2001 when suggestions to amend the Central Bank of Kenya (CBK) Act and cap lending rates at four per cent were mooted by legislators at the time but suppressed due to what was said to be lacking details.
The Bill was first sponsored by the then MP of Gem Joe Donde which came to be known as ‘Donde Bill’ – and was the first time the parliament discussed the country’s interest rates.
The proposed law was taken to a constitutional court by the Kenya Bankers Association who argued it had created uncertainty and confusion by failing to state clearly the Treasury Bill rate that financial institutions should apply to arrive at the lending and deposit rates.
Donde argued that at 24 per cent, interest rates were out of reach for many people, making them untenable for sustainable growth.
This time around the Bill unanimously received overwhelming support from legislators from both divide, Cord and Jubilee.