By Nicholas Nduati
Kenyans will have to wait a little bit longer for clarity from the courts and the Central Bank on whether interest rates on loans should be pegged on the Kenya Bankers Reference Rate or the Central Bank Rate.
This notwithstanding however, Kenya Bankers Association Chief Executive Oficer Habil Olaka says that all banks will comply with the new Banking Amendment Act by Wednesday next week following the expiry of the grace
A lack of clarity as to whether banks should peg interest rates on loans on the Central Bank Rate or the Kenya Bankers Reference Rate has seen banks use the CBR which is currently at 10.5% as their reference, higher than the KBRR which is at 8.9%.
Kenya Bankers Association Chief Executive Officer Habil Olaka says though banks are waiting for a resolution of the matter by the courts and the Central Bank of Kenya, by Wednesday next week all banks will have complied with the new Banking Amendment Act.
With the law requiring that only new loans will be capped at 4 percent above the Central Bank rate, Olaka notes that customers with existing loans will also benefit as various banks have decided to extend the favor.
With Kenyan banks currently facing increased competition from international banks, Central Bank deputy governor Sheila M’Mbijjiwe has called on local banks to increase their trust and customer confidence which she notes is still low in the country.
At the same time M’Mbijiwe says that the Central Bank is working on a strategy that will see banks register their Title deeds, T-Bills and Bonds at the CBK’s registry to enhance borrowing between small and large banks as well as increase liquidity.
They were speaking during the fifth Annual Banking Research Conference.