In Summary
  • Once filed at the National Assembly, the proposal will be read on the floor and the House Business Committee that is chaired by Speaker Justin Muturi, who will set a date for a motion.
  • The Gatundu South MP’s proposal comes after the National Assembly failed to get the numbers to stop the repeal of section 33B of the Banking Act, opening the doors for the return of high interest rates.
  • He said if banks “continue to misbehave”, he will reintroduce the capping of interests after six months, in line with parliamentary standing orders.

Gatundu South MP Moses Kuria wants Parliament to form a select committee to audit Kenya’s economic management as well as interest rates by banks and other financial institutions.

Once filed at the National Assembly, the proposal will be read on the floor and the House Business Committee that is chaired by Speaker Justin Muturi, who will set a date for a motion.

The 15-member committee will have him as chairman, Mr David Mboni (Kitui Rural), Mr Sam Atandi (Alego Usonga), Mr John Sakwa Bunyasi (Nambale), Mr Memusi Kanchori (Kajiado Central), Mr Abdulswamad Shariff Nassir (Mvita) and Mr Kathuri Murungi (Imenti South).

Others are Mr Shakeel Shabbir (Kisumu Town East), Mr Chris Wamalwa (Kiminini), Mr Caleb Kositany (Soy), Ms Purity Wangui Ngirichi (Kirinyaga County), Ms Beatrice Adagala (Vihiga), Ms Rosa Buyu (Kisumu), Ms Soipan Tuya (Narok) and Ms Jessica Mbalu (Kibwezi East).

BANKING ACT

The Gatundu South MP’s proposal comes after the National Assembly failed to get the numbers to stop the repeal of section 33B of the Banking Act, opening the doors for the return of high interest rates.

The proposal to repeal the Act was contained in the 2019 Finance Bill that was signed into law by President Uhuru Kenyatta on Thursday.

The law, which took effect in 2016 following the passing of a bill tabled by Kiambu Town MP Jude Njomo, imposed rate caps on commercial lending rates at four percentage points above the benchmark Central Bank of Kenya rate.

Supporters of the law said it would cushion Kenyans from exploitation and high loan costs.

EFFECTS

Making changes to the law has an effect on interest rates and the market for loanable funds, meaning commercial banks would be at liberty to vary the loan terms.

Already, some banks have issued memos to their staff to review interest rates.

“Following the signing of the Finance Bill into law by the President, the bank has reviewed interest rates for various products based on the associated credit risk. The pricing of the existing loans will be communicated in due course,” Sidian Bank CEO Chege Thumbi said in a November 8 circular to employees.

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