There is concern that not many banks are actually reporting the true figure of non-performing debt for fear of annoying shareholders, while others are overstating the dud portfolio to cheat on the taxman. KRA believes the loans are recoverable. The Central Bank requires that if an account is not serviced for three months, interest earnings are suspended but the rule is frequently flouted, a bank manager said. While most banks recorded reduced profits last year, the Donde Bill that seeks to peg interest rates on benchmark Treasury Bill rates is threatening to dent the income of many banks. We are heading for a controlled market if this bill is passed.
Capitalisation is another issue.
Some of the small banks with a small capital base have problems attracting deposits. Merging small banks has proved difficult because they are often controlled by individuals. The East African .