Kenya reg­u­la­tor wants banks to avoid puni­tive mea­sures

Banking Frontiers - - Regulator -

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.

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