A section of MPs have dismissed the move by banks to offer Sh30 billion to Small and Medium Enterprises (SMEs) on friendly terms as a public relations gimmick meant to dissuade Kenyans. The MPs said the move is meant to persuade President Uhuru Kenyatta not to assent to the Bill on capping of interest rates.
“We are wondering whether this is a genuine change of heart or a knee-jerk reaction to persuade the President not to assent to the Banking (Amendment) Bill,” said Kiambu Town MP Jude Njomo. Mr Njomo is the sponsor of the Bill passed by the National Assembly two weeks ago and now awaiting the President’s signature or return to Parliament for possible preferred amendments.
Mr Njomo said similar promises have been made over the past 20 years that MPs have been trying to get in place a law to limit the interests that banks can charge on loans. The introduction of the Kenya Banks’ Reference Rate (KBRR) has also not had much of an impact on interest rates as promised when it was introduced, said Mr Njomo.
The commitment by the banks was made on Wednesday with a Memorandum amongst them handed over to Central Bank governor Dr Patrick Njoroge. The lawmakers however argued that the MoU has no basis in law and is therefore not a reason to believe that the intended beneficiaries would get the money.
“Unless it is legislated and there are safeguards, it is not something that we can take as a genuine offer,” said Mr Njomo. Mr Aden, the Balmbala MP, said the difference between the rates paid on deposits should not be as high as it currently is in Kenya. “It is very ironic of commercial banks to come and say they want to give SMEs loans at friendly rates. This is proof itself that the rates you have are not friendly. Banks should just run their business ethically,” he said.