The Kenyan government is experiencing efficiency challenges in its quest to lower bank interest rates despite the introduction of the Kenya Bankers Reference Rate which many had believed would help bring about lower lending rates.

National Treasury Cabinet Secretary (Minister) Henry Rotich says a committee has been set up at the Treasury to come up with new ways of influencing financial institutions to reduce their lending rates.

Many Kenyans had hoped that the regulations put in place by both the Central Bank of Kenya and the National Treasury — including the introduction of the Kenya Bankers’ Reference Rate — would help bring about a reduction of interest rates on loans.

With the minimum interest rate on loans being charged by banks currently standing at 15 per cent, Rotich on Thursday admitted that curbing the high interest rates was an “efficiency challenge” which his ministry has to grapple with.

He, however, asserted that all is not lost and a committee has been set up to review how best the interest rates could be brought down.

At the same time, Rotich said, new regulations were being developed to control the activities of the non-deposit taking credit micro-finance institutions to protect consumers in the country.

The new regulations will be covered by the proposed Financial Services Bill being drafted.

Rotich called on micro-finance institutions to help bridge the huge housing gap in the country through innovative credit provision which would help lower the cost of buying houses.

Source: Nam News Network