Kenyan lawmaker proposes raising cap on commercial lending rates

NAIROBI (Reuters) - A Kenyan lawmaker has proposed raising a cap on bank interest rates to six percentage points above the central bank's policy rate, to increase lending to small and medium-size enterprises, a parliamentary document showed on Monday.

The cap, now at four percentage points above the police rate, was imposed in September 2016 after lawmakers accused banks of overcharging borrowers.

Moses Kuria, a ruling party MP, said his amendment to banking laws would keep the cap at 4 points above the policy rate for "low-risk clients", but introduce "a risk negotiation window" of up to 6 points for individuals and small and medium-size companies perceived as risky.

Amendments usually take time. A lawmaker proposing them must draft a bill and submit it to parliament for referral to the relevant committee, legislative experts said.

An attempt by Finance Minister Henry Rotich to repeal the cap, after it was partly blamed for a drop in private-sector credit growth, in June last year was blocked by lawmakers.

Banking executives did not immediately respond when Reuters asked for comment.

(Reporting by Duncan Miriri, editing by Larry King)