Banks to set interest rates as MPs fail to overturn Uhuru memo

Parliament was forced to adjourn on Tuesday after MPs walked out following the passage of the law setting stage for banks to charge interest rates on loans as they please.

Kenyans will now borrow loans from banks at interest rates defined by the financial institutions.

This was after MPs failed to raise numbers required to overturn President Uhuru Kenyatta's reservations of their earlier attempt to retain the limits on interest rates at 14 per cent.

At least 233 MPs were required to vote to defeat the reservations, a number that has proven difficult for Parliament to raise.

Only 161 members were present.

This means that commercial banks will now be at liberty to charge the rates as they please following the repeal of Section 33 (b) which set the caps

Uhuru, in his refusal to assent to the Finance Bill, said the interest rate caps stifled borrowing by SMEs arguing the entities were crowded by government's appetite for borrowing from commercial banks.

MPs opposed to the caps protested the manner in which the vote was conducted and walked out after suffering defeat in the House.

The lawmakers staged a quorum hitch after the walkout, with some carrying placard declaring that their constituents had voted no.