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Central bank proposes withdrawing the law on interest rates cap

You are likely to pay more interest on commercial bank loans if parliament agrees to a proposal by the Central Bank of Kenya to have interest rate caps removed.

Caps were introduced in September 2016 to tame the high cost of credit that saw some banks issue up to 25 percent interest on loans two years ago.

CBK set a  ceiling on loans at  4 percent above the Central Bank rate which currently stands at 9.5 percent.

Speaking to parliament’s finance committee CBK Governor, Patrick Njoroge said the caps are not working and has among other things contributed  to slowing credit uptake in the private sector.

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