REGULATE BANKING SECTOR

With an estimated three million account-holders, and commercial banks increasingly scrambling for customers, things are certainly looking up.

This is in no small measure due to the micro-financiers and co-operative societies that have forced banks to open up their vaults through competition.

Additionally, Treasury’s relatively loose monetary policy and conscious reduction of appetite for borrowing have knocked banks off their comfort perch.

Yet customers still pay heavily, both for loans and deposit accounts, a situation that must be addressed.

A survey released by Central Bank of Kenya on Tuesday found that loans were too expensive and banks disguising the charges. On the other hand, savings are costly in most banks.

Banks should be forced to make full disclosure of the costs associated with both loans and deposits. This will eliminate a situation where these institutions are hawking personal loans, but offering half-baked information.

Two, the CBK should revert to publishing bank rates to offer consumers comparative information. The CBK has no business lecturing commercial banks about disclosure while it is not helping the situation.

Third, the CBK, which is also charged with maintaining price stability has to tame the double-digit inflation. While there is a delicate balance between credit squeeze and price stability, it is clear banks are charging high rates due to inflation.

Lastly, overall competition and efficiency have to be fostered by all Government agencies through strengthening Sacco, micro-finance and banking sectors.



SOURCE: DAILY NATION