MPs take tough stance on banks

Members of Parliament rose in open rebellion on Tuesday and vowed to fix interest rates by law.

President Kibaki, Prime Minister Raila Odinga and Vice-President Kalonzo Musyoka were said to have been taken aback by the rejection of their proposals by MPs.

The political leadership was also trying to lobby MPs to endorse Mr Mumo Matemu as chair of the Ethics and Anti-Corruption Commission.

The MPs later approved his nomination.

The MPs had argued that a parliamentary matter should not be discussed outside the House. They also felt that banks were fleecing Kenyans and profiting from the suffering of their customers.

“The MPs were very clear in their minds. They did not mince any words when it came to the amount of interest that banks are charging borrowers. They said banks should operate at levels where they make normal profits and not abnormal ones when Kenyans are suffering,” said Yatta MP Charles Kilonzo at Parliament Buildings after the meeting.

Banks have raised their lending rates to 24 per cent following the lead of the Central Bank, which has been trying to squeeze credit to control inflation. (READ: Uhuru in fresh clash with MPs over taxes)

The lawmakers’ hard-line stance is said to have taken the President and Mr Odinga by surprise.

“They refused to speak when they were asked to comment,” Mr Pollyns Ochieng’ (Nyakach) told journalists at Parliament Buildings shortly after the meeting.

Assistant minister Kabando wa Kabando, Mr Isaac Rutto (Chepalungu) and Mr Mithika Linturi (Igembe South) said the principals were out of order to raise the matter.

Consensus on graft

“It’s a tragedy if PNU and ODM adopt consensus on graft. The President and the Prime Minister shouldn’t attempt to muzzle Parliament,” Mr Kabando said.

A dispatch from the Presidential Press Service after the meeting only mentioned the issues discussed.

“During the meeting MPs candidly discussed the current economic situation in the country and steps that need to be taken to stabilise the exchange and interest rates. The Parliamentary Group also discussed the various steps to be taken to control inflation by lowering food and fuel costs. The meeting also discussed pending parliamentary business ahead of the recess,” it said.

Mr Musyoka, who moderated the session, said there would be no formal statement to an “informal session.”

But Dr Boni Khalwale (Ikolomani) said MPs told the principals that they would not stop the campaign to tame commercial banks.

“We are solidly behind the amendments by Mr Jakoyo Midiwo,” Dr Khalwale said.

It emerged that Dr Khalwale had challenged the principals’ decision to hold the meeting, saying it amounted to subversion of the Constitution as far as the doctrine of separation of powers was concerned.

Mr Odinga addressed Parliament later in the afternoon and defended the decision to meet MPs.

“To the best of my knowledge, I didn’t know that the new Constitution had barred parliamentary group meetings. The Sixth Schedule provides for transition and we’re in that period… Political parties will continue meeting. It’s a normal parliamentary practice even in the House of Commons,” he said.

Interest rates

The amendments to the Finance Bill seek to control interest rates that banks charge to no more than four percentage points above the CBK rate.

Currently, banks charge more than 10 percentage points and passage of the new law would limit interests on loans to a maximum of 22 per cent.

Mr Midiwo also wants banks compelled to pay interest on deposits at a rate of at least 70 per cent of the base rate set by the Central Bank.