The Institute of Certified Public Accountants of Kenya (ICPAK) has endorsed a Bill seeking to cap interest rates, saying if adopted it would provide a mechanism for regulation to benefit borrowers.
“Ceilings if well implemented can be a good way of protecting consumers from high interest rates, making loans affordable,” Julius Mwatu, ICPAK national vice chairman said in a statement Wednesday.
The Bill is currently before President Uhuru Kenyatta, who is expected to either reject it or sign it into law.
The proposed law is intended to regulate interest rates applicable to bank loans and deposits. It also prescribes penalties for bank officials who violate the requirement.
The 2015 Banking Amendment Bill caps bank interest rates at four per cent above the indicative Central Bank Rate (CBR).
Bankers have urged President Kenyatta to reject the Bill, arguing that it will hit small borrowers the hardest.
If Mr Kenyatta signs the Bill into law, the bank lending rates will be capped at 14.5 per cent (based on the current CBR of 10.5 per cent), a significant difference from the current average lending rate of 18 per cent.