Nairobi — The East African Bankers Association is working on putting up measures that will allow financial institutions in the region reduce interest rates, without using legislation.
The recently appointed chairperson of the association Habil Olaka says most of the residents in the region avoid taking loans due to high interest rates, which he says threatens investments in the region.
In an interview with Capital FM News, Olaka who is also the CEO of the Kenya Bankers Association says the secretariat of the EAC bankers association is discussing how to put in place measures that will bring competition in the banking industry which could force banks to rein in rates to retain their customers.
"When we were having that lively debate here in Kenya about the high interest rates, the same thing was happening in Uganda. In fact, at the time when the issue was in Parliament in Kenya, in Uganda actually, they were almost on the streets, against the same issue. In Tanzania it was no different. In Rwanda... the same thing. And so it was on our agenda to tackle the interest rate problem," said Olaka.
He however says there is no fear of banks losing their customers to other small financial sectors which give loans like Saccos, adding that each of these institutions give different services.
"The consumer needs to be given a choice. Mostly, the person who goes to the informal sector may not be looking for the same product that the bank is giving. But however within the banking sector we are aware of the fact that in terms of access, there is a person who is currently either under banked, or completely unbanked and we need to extend our services to that consumer," said Olaka.
Meanwhile the association is also working on dealing with fraud within the banking sector especially through the electronic system.
He says they are working with other stakeholders especially the Information Technology experts to curb this.
He says they will first concentrate on awareness by urging customers to follow the given basic regulations on the use of especially the ATM and debits cards.
The East African Bankers Association was formed in March this year after a memorandum among bankers' associations from the five countries in the EAC region which include Kenya, Uganda, Tanzania, Rwanda and Burundi.