Investment and property portfolio management firm Alliance Capital Limited (ACL) has said the debate on interest rate capping should not be dismissed outright on account of unintended consequences experienced in some countries.
In its 2018 Annual Economic Report, ACL says the decision as whether to cap or not to cap interest rates should be informed by evidence.
“The starting point would be for policy makers to use empirical studies to understand what exactly determines the rate borrowers end up paying. In other words, authorities should “unpack” what goes into the interest rate that lending institutions charge and figure out what can be done to reduce them while maintaining the lending institutions efficiency and sustainability.
The Bill, which proposes to cap the interest rate applicable on the credit facility to a certain percentage above the prevailing policy rate for lenders and below the same policy for depositors, was first tabled in Parliament in December under the Private Members Bill by Dowa West legislator, Alexander Kusamba Dzonzi.