Commercial banks in Kenya have asked the parliament to at least increase the interest rate capping limit if they are not in favour of revoking the law.

The Kenya Bankers Association (KBA) has presented their proposal before the Finance and Planning Committee of the National Assembly. KBA chairman Joshua Oigara stated that the move is highly essential for the growth of commercial banks in Kenya.

According to North Imenti MP Abdul Dawood, if the interest cap is removed, the banking sector will automatically increase the interest rates to 25 to 30 percent. Such high-interest rates will become unaffordable for Kenya’s small and medium-sized enterprises which will lead to their collapse.

In response, Joshua Oigara told the media that, “Ultimately parliament has the final say on what is too high, banks have learnt from this and I am sure they will not go back to the 25 to 30 percent that they were charging previously.”

The interest capping law in Kenya was enacted in September 2016 with the intentions to make credit cheaper, easily accessible and to increase the returns on savings. However, since the law was enacted, it has been the source of major debates and controversy.

Earlier this year, the high court suspended the law for a period of 12 months calling it unconstitutional. A three bench court ruled that the law has been suspended to give the national assembly an opportunity to reconsider the existence of the provisions in the Banking Amendment Act 2016.

The International Monetary Fund (IMF) also opposed the law. It issued a warning to the Kenyan parliament asking them to revoke or rectify the law in order to receive a $989.8 million funding.