Most major banks are listed in the stock exchange. You don't have to be rich to own a piece of the bank. Take the deposits for which you are being paid peanuts and buy a piece of the bank if you believe the owners are making a killing and getting richer?

Is this rocket science?

The only reason people park money in a bank is lack of ideas! Toa pesa yako!!

The cap is not the biggest problem as this cap won't affect banks in the medium term but rather SMEs, unsecured credit and personal loans.

Banks lend money belonging to depositors, not their own capital. From that perspective, why would any depositor risk they money by lending at a higher risk/ lower rate than rates they can lend to the government on a risk free basis.

A smarter policy would be (1) introduce positive credit reference so as to profile good borrowers that deserve low interest rates (2) to cap government borrowing by limiting how much treasury bonds each bank can buy, (3) introduce discipline in government spending, (4) better bankruptcy, recovery and foreclosure laws. All which are pipe dreams when dealing with a rogue broke government.

That is OK, but no developed state has ever been built on high interest rates. Annual margin of profit on a number products/companies does not exceed 20% per year

We are all focussing on the wrong end of the proposed bill.

Talk to any banker handling corporate clients. 14.5% interest rate is a dream deal they would offer without thinking twice. The big-time syndicated loans, safaricom, kplc, kenya pipeline were all quoted at a floating rate based on 91-day t-bill rate plus a margin not exceeding 2%.

4% above cbr doesn't scare them. What terrifies the banksters, is the deposit rate pegged on 70% of cbr. Take equity bank's interest expense for example. Taken as a percentage of the customer deposit held, it averages 1%-1.5%. Were the new rules to take effect, their interest expense charge would grow at least 5-fold.

I suspect @maichblack knows this and his portfolio is badly exposed.

We know Uhuru won't sign the bill. But a warning shot has been fired.

While we are comparing interest rates in Kenya and the developed world. Let's also remember that they have higher public savings, better laws to address default and above everything else a well developed credit score system.

All which help bring the NPL rates low through either behavior change (credit scores) or default recoveries (laws).