Commercial banks on Tuesday said rate caps had led to a vicious cycle featuring job losses and contraction in credit.
Banks have recently sacked thousands of workers and unveiled technology platforms in a bid to reduce cost, enhance efficiency and stem declining revenue.
Critics have accused banks of engaging in “blackmail and economic sabotage to force amendments”.
Commercial banks on Tuesday continued their onslaught on the rate capping law, insisting interest controls have defeated the objective of providing affordable credit to consumers.
Industry lobby Kenya Bankers Association (KBA) chairman and Standard Chartered #ticker:SCBK regional chief executive Lamin Manjang told the ongoing inaugural Euromoney Kenya Conference that rate caps had led to a vicious cycle featuring job losses and contraction in credit.
“We should allow market forces to determine prices and of course the role of government, therefore, is to encourage fair competition to make sure that the level playing field is there including the Central Bank regulating the sector to make sure the rules are followed,” he said.
The law limits interest on loans at four percentage points above the Central Bank Rate (CBR).
Banks have recently sacked thousands of workers and unveiled technology platforms in a bid to reduce cost, enhance efficiency and stem declining revenue. But critics have accused banks of engaging in “blackmail and economic sabotage to force amendments”.
KCB Group #ticker:KCB chief executive Joshua Oigara exuded optimism that ongoing “conversations” between regulators and the industry on the unfolding impacts of the law would lead to an ideal situation for both banks and consumers on the future of the controls.
Speaking at the two-day conference on digital business and the financial ecosystem in Kenya and the continent, Central Bank of Kenya governor Patrick Njoroge tipped banks to adopt financial technology innovations to stay relevant to the consumers in a fast-changing digital environment.
He predicted a “digital shift” for banks where they will be compelled to offer services away from the brick and mortar branches on phones.
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