Consumers Federation of Kenya (Cofek) has termed International Monetary Fund (IMF) call on Kenya to remove bank interest rate caps reckless.
Terming the move uncalled for, the group said past IMF policies are to blame for the sad state of Kenya’s banking sector.
“While IMF is quick to call for removal of caps on interest rates, it turns a blind eye on the reason capping was necessitated,” said Stephen Mutoro, the organisation’s secretary general in a statement adding the banking interest was rife with malpractices.
He said the industry was suffering from insider trading, huge loans to undeserving bank directors and kin and cooked book.
Mutoro said until banks embrace appropriate business ethics, the proposals by IMF and its’ fears on financial and financial inclusion risks remain unrealistic and anti-consumer interest.
“Talk that the rate cap had reduced access to credit and economic growth is stage managed. On the contrary, sulking banks complied with interest capping but introduced an avalanche of other high costs which combined to make loans unattractive,” he said.
