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| President Uhuru Signs 2019 Finance Bill Into Law |
End of cheap loans! The president on Thursday signed the Finance Bill 2019 into law ,giving commercial banks and other financial service providers the freedom to price loans as they wish.
Since the year 2016, when the interest rate cap issue was signed into law by Mr Kenyatta, lenders regulated by the Central Bank of kenya (CBK) were not to charge anything more than 4% above Central Bank Rate (CBR).
CBR remained around 9.5% and 9.0% since, and the interest rate charged by banks was around 13.5% and 13% on new loan facilities.
With the interest rate cap removal, commercial banks and microfinance institutions will now be able to place varied interest rates depending on the creditworthiness of the customer asking for the loan.
Borrowers with a good credit score will still enjoy most probably cheap loans while those borrowers with questionable credit ratings will get loans at a hiked interest rate.
The rate cap removal in kenya will affect new loan facilities. Existing loans will be repaid as earlier agreed when rate cap was in place .
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