The Departmental Committee on Finance and National Planning Committee chaired by Joseph Limo on Tuesday agreed to support President Uhuru Kenyatta’s recommendation to do away with interest rate capping. 

They, however, said that there was need to protect existing borrowers from being affected until they clear loans issued before the scrapping of interest caps.

New amendment

In its report to the house, the committee is proposing to introduce a new amendment stating that any agreement or arrangement to borrow or lend which was made or entered in to will continue to be in force on such terms including interest rates and for the duration specified in the agreement or arrangement.

The president’s reservation is expected to be debated by the house either today or tomorrow.

Last week President Uhuru Kenyatta declined to approve the Finance Bill, 2019 and asked MPs to scrap commercial lending rate caps which have reduced credit.

In 2016, the government imposed the legal caps on lending rates at four percentage points above the Central Bank’s benchmark.