Comply with the law or we meet in court, banks told

 

Kaimbu MP Jude Njomo who sponsored the recent amendment to the Banking Act has told banks to lower their lending rates immediately or he sues them in court.

President Uhuru Kenyatta assented to the Banking Amendment Law on Wednesday and the MP now wants banks to immediately comply with the new law.

Yesterday, the Kenya Bankers Association said the existing rates would continue to be in force until rules on capping are published.

“In the interim, the existing loan and deposit account terms will apply,” the association said in a statement.

But Mr Njomo says things must change immediately.

“They have to obey it. Last time they went to court on basis that law cannot be applied in retrospect.  I tell them law cannot be postponed either. They cannot have their cake and eat it. If they don’t, it will be their turn to be taken to court,” Njomo said in a statement.

“I urge the banks to embrace the new law in the spirit of developing our beloved Country. The idea that they will maintain current interest rates awaiting guidelines on how to effect new law cannot be entertained. It is now law,” he added.

His sentiments were backed by a consumer lobby group that also demanded that the new rates be put into practice immediately.

After the President’s assent on Wednesday, the attorney-general has seven days to publish the Act, which then comes into effect after 14 days.

The expectation of most borrowers is that they will be moved to the new order once it is in force.

Njomo, who is currently in Rome, Italy where he travelled to join other Catholic legislators from all over the world for prayers and conference thanked the President for signing the Bill to law.

“I am very excited and grateful to His Excellency the President for signing the Banking Amendment Bill into law and thank the people of Kenya for their support,” he said.

President Kenyatta signed the Bill into law on Wednesday despite intense lobbying by banks that the move will hurt the economy.

The Banking (Amendment) Bill now law, 2015, requires that banks shall not charge interest above four per cent of Kenya Banks’ Reference Rate.

It proposes imprisoning chief executives for over a year in cases where banks overcharge loans and that customers be entitled to interests of up to 70 per cent on their deposits.

Commercial banks have said the law does not specify the base rate for determining the maximum lending cost, hinting at implementation delays.

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