Kenyan legislators have passed a Bill that seeks to cap bank interest rates at not more than four per cent above the Central Bank Rate (CBR) in their latest attempt to arrest the runaway cost of borrowing.
Chief executives of commercial banks and other lending institutions will face a Sh1 million fine or imprisonment for a term of not less than one year or both if convicted of flouting the law.
Commercial banks have been constantly accused of cartel-like behaviour of hiking interest rates immediately after they see market signals but failing to cut them when conditions allow.
The Bill, sponsored by Kiambu MP Jude Njomo, also pegs the minimum interest granted on a deposit held in an interest-earning account to at least 70 per cent of the base rate set and published by the Central Bank.
MPs on Wednesday urged President Uhuru Kenyatta to quickly sign the Bill in order to protect Kenyans from high interest rates.