In Summary
  • The Finance Act, 2019, repealed Section 33B of Banking Act introduced in 2016 by Kiambu Town MP Jude Njomo.
  • The new law also introduces tax on income raised from the digital marketplace as a measure of ensuring equity in taxation.

Commercial banks and other financial institutions now have the liberty to vary their interest rates on loans following the signing into law of the Finance Bill, 2019, by President Uhuru Kenyatta on Thursday.

The Finance Act, 2019, repealed Section 33B of Banking Act introduced in 2016 by Kiambu Town MP Jude Njomo.

However, it maintains steady interest rates on loans already given by the commercial banks, including arrangements for new loans, after the MPs amended the President’s memorandum on the Finance Bill, 2019.

AMENDMENTS

Mr Njomo’s amendment saw caps on commercial lending rates placed at four percentage points above the benchmark Central Bank Rate to cushion Kenyans from the high coast of loans and exploitation by banks.

Although the MPs had voted twice to reject the National Treasury’s attempts to remove the rate caps, they failed to veto the President’s October 16 memorandum to the House after a quorum hitch.

“Repeal of the Banking Act is expected to enhance access to credit by the private sector, especially the micro, small and medium enterprises (MSMEs), as well as cut out exploitative shylocks and other unregulated lenders,” a brief from State House said.

The new law also introduces tax on income raised from the digital marketplace as a measure of ensuring equity in taxation.

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