CBK Governor Dr Patrick Njoroge and National Treasury Secretary Mr Henry Rotich at a past event
The attention of Consumers Federation of Kenya is drawn to heightened uncertainty for bank borrowers following the statement issued by Central Bank Governor Dr Patrick Njoroge yesterday.
We are concerned at the continued blanket and near fanatical opposition by Dr Njoroge on rate capping law, without scientific justification. This is especially erroneous as many banks continue to post huge profits.
We reiterate that removal or application of rate caps is not the only mandate of CBK.
Dr Njoroge is quoted as saying there are many ways of removing the Banking Act, 2016 without necessarily amending or repealing the law. There is no other such other lawful avenue save for declaration by a Court of law as “unconstitutional”. Consequently, our legitimate fears are that CBK is likely to unduly influence the High Court Case No. 413 of 2016 in which matter Cofek is a party.
We urge the Finance and Planning Committee of the National Assembly to summon and inquire from Dr Njoroge on what he meant as regards the ways and means he will apply to remove the rates capping law other than through parliament.
Further, the Governor has consistently and significantly failed to rein in on the rampant indiscipline in the banking and financial services sector. Although he has severally acknowledged the banks were charging massive hidden costs, for instance, no single bank has so far been penalized.
On bank CEOs and directors who have overstayed in their positions contrary to the prudential guidelines, CBK has either remained impotent or unwilling to execute the Banking Act in general.
In the same briefing, the Governor was dishonest on claiming that CBK consults consumers. Truth is that the last time, in 2016, he talked to the Cofek Secretary General he hanged up the phone in total and uncontrolled fury for the single reason that we announced on our social media pages that we were due to meet him the following day to discuss the fate of Imperial Bank customers.
We were not surprised when the CBK completely abandoned consumers in the Mshwari interest rates case – in which interest rates were christened as “facilitation fee” by a local bank to justigy the 90 per cent rate. The case was dismissed by Justice Fred Ochieng in the most unconvincing manner.
Dr Njoroge, a former employee of the IMF, is either complacent or being bullied by the IMF into reviewing the Interest Caps law without demonstrating any positive shift on the very reasons that necessitated the capping in September 2016.