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{
    "id": 472073,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/472073/?format=api",
    "text_counter": 48,
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    "content": "the Cash Reserve Ratio (CRR) over the years. In fact, it used to be over 20 per cent but it has been reduced to 12 per cent. It has probably been reduced significantly over the years to about 10 per cent in order to allow banks to enjoy that liquidity and be able to lend. That is why the CBK is also a lender of last resort; it is because of the fact that they keep money with the CBK. For the CBK to lend, it charges a very minimal amount – a maximum of about 1 per cent or 1.2 per cent – and this is when the banks cannot borrow from other banks. Mr. Speaker, Sir, Sen. Kiraitu spoke about the Donde Act. I am not sure, but I do not think that, that rule has, in any way, been repealed. I remember that that Act is still in force. To the best of my knowledge, when you borrow, the total amount of repayments that you make should never exceed twice the principal amount that was borrowed at any one time. I think part of the challenge we have is transparency by banks. There is a case in court which is challenging this issue and which is actually going to put a lot of strain on the commercial banks because Section 44 of the Banking Act about the charges that the bank is supposed to charge, you are not supposed to change the rates or the charges unless it is approved by the CBK. What banks have been doing is that they have been changing the rates without getting the concurrence of the CBK. As a result, there are people who have gone to court; a class action that we saw in the newspapers last week. I think it is important that banks take heed of the fact that any law that has been passed by Parliament remains in effect and they must comply. Mr. Speaker, Sir, the last point is by Sen. (Prof.) Lesan; the cash inflow from the Eurobond, the moment it comes, I have no doubt that it should reduce the rate of interest in the country. On that one, we are sure."
}