Uhuru has 14 days to sign or reject Bill on bank loans
President Uhuru Kenyatta signs various pieces of legislation related to the Budget and Amended Political Parties Act into law at State House, Nairobi. Looking on are Deputy President William Ruto and National Assembly Speaker Justus Muturi. President Kenyatta received the Banking Act (Amendment) Bill on August 15, 2016. PHOTO | FILE
What you need to know:
- Banks have opposed Banking Act (Amendment) Bill, preferring to let the market determine cost of loans.
- State House Spokesman Manoah Esipisu confirmed that the President had received the Bill in the afternoon.
- MPs have said that the Bill will help Kenyans access cheap loans by capping the amount charged on interest at not more than 14.5 per cent.
- The Bill provides that banks cannot exceed four per cent of the Central Bank Base Rate, which currently stands at 10.5 per cent.
Kenyans will know in two weeks whether they will start enjoying lower interest rates on bank loans.
This is after President Uhuru Kenyatta received the Banking Act (Amendment) Bill on Monday from National Assembly Speaker Justin Muturi following its approval by lawmakers two weeks ago.
State House spokesman Manoah Esipisu confirmed that the President had received the Bill in the afternoon. He now has 14 days within which to either accept or veto the Bill. However, Parliament can override a veto with a two-thirds majority.
President Kenyatta has not commented in public whether he was for or against the Bill despite raging debate on its merits, led by MPs who supported it overwhelmingly and the business community on one side, and bankers opposed to it on the other.
The MPs, led by the sponsor of the Bill, Kiambu Town MP Jude Njomo, have said the Bill is timely as it will go a long way in helping Kenyans access cheap loans by capping the amount charged on interest at not more than 14.5 per cent.
SETTING LOAN RATES
The Bill provides that banks, which have enjoyed a free hand in setting loan rates, cannot exceed four per cent of the Central Bank Base Rate, which currently stands at 10.5 per cent.
However, the resistance to the Bill’s passage by top government officials led by Treasury Cabinet Secretary Henry Rotich and Central Bank of Kenya Governor Patrick Njoroge may give an indication as to whether the President will append his signature or reject the Bill considering that the two advise him on monetary policy.
Although some banks have offered affordable loans, reportedly setting aside over Sh30 billion to lend to small scale traders and workers at “affordable rates”, MPs led by Mr Njomo have dismissed the moved as a “public relations gimmick”.
President Kenyatta will have to balance the expectations of both the public and the banks, making his task all the more challenging.
A statement by Mr Esipisu over the weekend that the President was applying his mind to the issue and would pronounce himself within the time provided in law perhaps explains the tight balancing act he is expected to execute, especially at a time when his eyes are also set on re-election.
