Financial Institutions Given 14-days Ultimatum to Implement New Lending Rates

Kenyan commercial banks and mortgage finance companies have been given up to September 14, 2016 to comply with the banking (amendment) act 2016.

The Central Bank of Kenya (CBK) In a circular says those who will breach the law  risk being fined KSh1 million or the bank chief executive will be imprisoned for 1 year.

On Wednesday, Kenya Bankers Associations said all new loans will not be charged interests of more than four per cent above the base rate set and published by CBK.

“The voice of Kenyans has come out strongly that banks need to better serve their customers and pass on the benefit of enhanced efficiencies to borrowers and depositors. We appreciate this sentiment and are committed to win back the trust of the banking public by meeting their expectations,” Habil Olaka said in a statement.

“We have listened carefully to all the opinions expressed by the different stakeholders in the debate leading to the assenting of this law, and we are committed to implement both the spirit of the law and the substance thereof, as well as meet all the commitments outlined in our 10th August 2016 Memorandum of Understanding presented to the Central Bank of Kenya,” he added.

Already, KCB, CFC Stanbic , Guaranty Trust Bank and Co-operative bank become the first lenders to cut rates for all loans – both new and existing.