CBK mulls policy to protect customers from hostile banks

Central Bank of Kenya Governor Patrick Njoroge during an MPC press conference in Nairobi on March 28, 2019. PHOTO | SALATON NJAU | NATION MEDIA GROUP

What you need to know:

  • The High Court on March 14, 2019 declared the Banking (Amendment) Act 2016, which capped interest rates unconstitutional.

  • CBK governor said the effects of the capping law not only affected Monetary Policy Committee's effectiveness but also credit flow to micro, small and medium enterprises.
  • Dr Njoroge raised concerns over the upsurge of fake currencies circulating in the country.

The Central Bank is in talks with local banks to ensure that they don't introduce punitive measures in bid to recover money lost because of interest rates capping.

Central Bank of Kenya (CBK) Governor Patrick Njoroge said that they will draft a monetary policy to make the banking sector more customer friendly.

“We are hopeful that we will soon a have solution that is working for Kenyans and provide a conducive banking environment. The caps have in a sense destroyed part of our economy,” said Mr Njoroge.

The High Court on March 14, 2019 declared the Banking (Amendment) Act 2016, which capped interest rates unconstitutional.

According to the CBK governor, the effects of the capping law have not only affected the monetary policy’s effectiveness but also credit flow to micro, small and medium enterprises (MSMEs).

“Domestically, we need to find a way to expand credit access to MSMEs and provide them with other necessities to grow,” said Mr Njoroge.

'STRONG GROWTH'

Speaking when he paid a courtesy call to Uasin Gishu Governor Jackson Mandago on Monday, Mr Njoroge said that the bank will continue supporting the activities of the devolved units through timely disbursement of funds.

“In a nutshell the economy is reasonably well. We have seen strong rebound in the last two years ago. In 2018 the economy grew by 6.1 percent. We expect it to grow by 6.3 percent this year,” said Mr Njoroge.

While tourism, agriculture and manufacturing have rebounded, Mr Njoroge raised concerns over the upsurge of fake currencies circulating in the country.

Governor Mandago commended Central Bank for putting in place a monetary policy which has stabilized the Kenyan shilling.

“We are happy to note that Central Bank is working to make sure that the sector works in a professional manner,” said Mr Mandago.

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