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{
    "id": 632333,
    "url": "https://info.mzalendo.com/api/v0.1/hansard/entries/632333/?format=api",
    "text_counter": 40,
    "type": "speech",
    "speaker_name": "Hon. Njomo",
    "speaker_title": "",
    "speaker": {
        "id": 1784,
        "legal_name": "Jude L. Kangethe Njomo",
        "slug": "jude-l-kangethe-njomo"
    },
    "content": "Thank you, Hon. Temporary Deputy Speaker. I beg to move that the Banking (Amendment) Bill (National Assembly No.62 of 2015) be now read a second time. The principal objective of this Bill is to provide a mechanism of regulating banks and other financial institutions on the interests they charge through the introduction of a cap. The Bill proposes to put a cap on the interest rate on the amount that the banks and financial institutions charge for loans and fix a minimum rate of interest that those institutions must pay for deposits received from customers. To this end, the Bill seeks to amend the Banking Act by introducing a new Section 13(A) that requires that banks or financial institutions disclose all charges they charge when they are transacting those businesses. Many people have borrowed loans from banks and get surprised when they are asked to pay amounts which are much higher than they had anticipated because of the many hidden costs that are not disclosed during the borrowing. That has resulted into too many bad loans and many people have lost their property through auctions. As at 2014, there was a whooping Kshs107 billion non-performing loans. I am further asking that the Banking Act to be amended and a new Section 33(b) be introduced. The section will set a maximum interest rate chargeable by credit facilities at below 4 per cent of the rates set by Central Bank of Kenya (CBK) and guarantees an interest rate of 70 per cent of the base rate on the amount that one deposits with any bank. If this Bill is passed, it will go a long way in safeguarding loans that are taken by hardworking Kenyans. It will make sure that we have more people getting loans and using them for business. It is my considered view that any credit facility that will charge more than the recommended amount will be unfair to Kenyans and it is not going to help them. Kenyans will be unable to do any business. We know very well that any business that makes a profit of 30 per cent is termed as a good business. Today, many financial and banking institutions are charging as much as 24 per cent. If you are making a profit of 30 per cent and 24 per cent goes to the banks, you are left with only 6 per cent. That is the amount that you will have to pay taxes, pay your people and do all the other costings. It means that our people are working for the banks. That is why in this Bill, we propose to put some penalties for those banks and other financial institutions that are not going to abide by law. This law will target the management of those financial institutions. Our country’s development is guided by Vision 2030 and its roadmap to development. That will never be attained with the current mindset of banks. Banks do not think about the people who are borrowing the money. They only think about the profits that they are going to record at the end of the year. I have done quite a bit of research on many companies that earn over Kshs1 billion per year. I was surprised to find that, out of the 10 best performing companies in this country, seven of them are banks. I want to go through that analysis. The best performing company in the last three years has been Safaricom, which has been recording a profit of Kshs34.9 billion. It is followed by Equity Bank with a profit of Kshs18.1 billion; followed at position three by Kenya Commercial Bank at Kshs17.7 billion. Then there is Standard Chartered Bank with Kshs14.3 billion, East African Breweries Limited (EABL) with Kshs14.1 billion, Barclays Bank with Kshs12.3 billion, Co- The electronic version of the Official Hansard Report is for information purposesonly. A certified version of this Report can be obtained from the Hansard Editor."
}