Interests to go down as govt lowers rates

Interest rates on loans are set to go down after the lowering of rates on the government paper from 19% to 13%. This is according to the Central Bank of Kenya Governor Dr. Patrick Njoroge.

Dr. Njoroge said that CBK believes interest rates will come down and commercial banks will soon indicate lower interest rates to their borrowers.

He said CBK will encourage banks to begin lending longer term to ensure stability saying that there is no reason why they cannot lend on long terms.

The CBK boss directed auditors of all banks will now have to send their institution’s detailed financial reports to the Central Bank of Kenya for interrogation.

Dr. Njoroge said the regulator will be deeply interrogating data by banks on a loan by loan basis in the banks’ systems, going beyond mere financial reports.

This comes even as investigations on Imperial Bank continue, just weeks after the Central Bank placed it under receivership.

CBK says that the new measures have also been necessitated by revelations that Imperial Bank, which despite winning several awards on financial reporting, had falsified its records.

The CBK Governor is currently before the Senate Committee on Finance responding to questions on Dubai and Imperial Banks’ state as well as the current interest rates environment.

Dr. Njoroge said Dubai bank, which is being liquidated, had 7,700 depositors, but so far only 561 depositors have come forward to take their money.

This means the rest are still unknown despite the Kenya Depositors Insurance Company’s (KDIC) efforts to send messages through mobile phone technology and advertisements to depositors to come for their money.