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{
    "id": 269600,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/269600/?format=api",
    "text_counter": 411,
    "type": "speech",
    "speaker_name": "Mr. M’Mithiaru",
    "speaker_title": "",
    "speaker": {
        "id": 72,
        "legal_name": "Ntoitha M'mithiaru",
        "slug": "ntoitha-mmithiaru"
    },
    "content": "Mr. Deputy Speaker, Sir, I am properly versed in this area, so really I am not trying to gabble around with figures. What I said is that the discount window rate must be punitive as the last resort. I said that from June 2011 that is when the discount window by design started now being lower than what obtains in the market. I gave examples of some two rates that I have quoted for August and November. I thank the hon. Member for at least telling me what I know already. However, I was almost on my concluding remarks when I said that as a Committee we are trying to narrow down what is the cause of the decline of the shilling and what was the cause of the high inflation. We are now narrowing down that this activity at the window will give us a clue on what was actually going wrong. I said that when the banks were offered the opportunity to give their views to the Committee, all they gave as the reason was the current account, petroleum and oil, Euro crisis and the Japan Tsunami. Those are the reasons they gave. They told us very little about the reasons for this increased activity by the banks; was there something lacking within our industry that was causing some discomfort which could even bring crisis within our own banking system? Mr. Deputy Speaker, Sir, our Committee is very much alive to the situation that we need a stable banking system. Kenyans should be confident in their banking system. We have not threatened to disturb that scenario because it is not healthy for everybody. However, banks have played a role here. Their activity is the cause of all that. At the centre of that activity somebody was regulating. Somebody was watching. Why did the Central Bank of Kenya (CBK) allow discount window rates to be lower than what obtains in the market? That is the biggest question. Why did the CBK take that long to correct a situation when they saw the direction we were moving was going to affect all Kenyans? Why did the bank keep quiet when they knew that if the interest rates are so high there would be a lot of defaults and that would even mean banks posting less profit and even going towards liquidation? So, why create a crisis? Mr. Deputy Speaker, Sir, those are the issues. Fingers are pointing to the banks and saying they have caused this. However, our Committee was not able to pin down the commercial banks because somebody is supposed to tell them this is wrong. That is the regulator and that is why we narrowed down on the regulator. The banks should also be told that they must know they are operating under an economy and tomorrow they may see themselves out of business if they continue charging these high interest rates or engaging in some activities that will cause the decline of the shilling. With those few remarks, I beg to second."
}