Central Bank Governor fails to appear before MPs


Central Bank Governor fails to appear before MPs

The Central Bank of Kenya Governor Dr. Patrick Njoroge Ngugi failed to appear before the National Assembly Finance Committee and requested it to postpone his appearance until next week since he’s abroad attending a World Bank and International Monetary Fund meeting.

The National Assembly Finance Committee started its probe into mismanagement of three banks and the role of Central Bank in supervising the financial sector and why it failed to detect problems at the banks early enough.

Njoroge was expected to explain the status of Chase Bank, Imperial Bank and Dubai Bank which have been placed under receivership over liquidity problems.

The committee is also scheduled to grill former CBK Governor Njuguna Ndung’u.

Prof. Ndung’u has been criticized because under his leadership, the Central Bank appeared not to have supervised banks adequately, allowing them to get away with improprieties.

At the same time, the Public Accounts Committee has launched a probe into the National Bank of Kenya.

Capital Markets Authority officials appeared before the committee to explain what measures it has taken against the bank for failing to issue loss warnings.

Parliament began debate on the Banking (Amendment) Bill, 2015 Wednesday, that seeks to regulate banks’ interest rates at not more than four per cent of the base lending rate set and published by the Central Bank of Kenya. The Bill sponsored by Kiambu MP Jude Njomo, proposes to peg the minimum interest granted on a deposit held in interest earning account to at least 70 per cent of the base rate set and published by CBK.

During the Second Reading of the Banking Amendment Bill, MPs said it was time the law controlled banks to cushion customers who they claim have been impoverished by high interest rates on loans that do not improve their lives.

If enacted into law, banks’ lending rates would be capped at 15 per cent based on the current benchmark rate of 11 per cent.

Currently, those borrowing personal unsecured loans are paying up to 25 per cent interest.

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