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Kenya's move to cap commercial rates may lock out borrowers - IMF

26 August 2016, 09:56

Nairobi (Reuters) - Kenya's decision to put a ceiling on the amount of interest banks can charge their borrowers may exclude small borrowers from accessing loans and further curb already sluggish private sector credit growth, a senior IMF official said on Thursday.

Armando Morales, the International Monetary Fund's representative in Kenya, said small firms and individuals could be deemed too risky by banks, whose lending rate will be capped at 400 basis points above the Central Bank rate, now at 10.5 percent.

"For them narrowing the spread, it will make it less attractive for banks to continue lending to them at the same pace," he said.

- Reuters

Tags banking

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