Kenya regulator wants banks to avoid punitive measures
The Central Bank of Kenya is discussing with local banks to ensure that they do not introduce punitive measures while recovering money lost because of interest rates capping. The central bank’s governor Patrick Njoroge said that central bank will draft a monetary policy to make the banking sector more customer friendly. He felt the caps have in a sense destroyed part of the country’s economy. The country’s High Court had declared the Banking (Amendment) Act 2016, which capped interest rates, unconstitutional. Njoroge feels the effects of the capping law have not only affected the monetary policy’s effectiveness but also credit flow to MSMEs. He says there is need to find a way to expand credit access to MSMEs and provide them with other necessities to grow.