Banks have started reeling from the effects of the new law capping interest rates, a day after it came into effect.
On Wednesday, President Uhuru assented to the Banking (Amendment) Bill, 2015 that was passed by the National Parliament in July, paving the way for cheaper loans.
The law caps interest rates at 400 basis points above the current Central Bank Rate set by the banking regulator.
Currently, the CBR rate is 10.5 percent, meaning banks can only charge not more than 14.5 per cent
And on Thursday, share prices of banks listed at the Nairobi Securities Exchange were on a free fall following investor exit at these counters.
According to the Star, as at 11.25 am, Equity Bank was down 9.72 per cent.
The bank closed Wednesday at Sh36.
"The banking stocks have taken a fearful battering this morning in the first reaction to the President assenting to the interest rate capping bill," said financial analyst Aly Khan Satchu as quoted by the Star.
On the other hand, KCB which closed on Wednesday at Sh32.75 was down to Sh29.50 as at 11.30am, while Barclays was trading at Sh8.75, down 9.79 per cent.
The Star said stock brokers there were massive offers for the bank stocks as investors, mostly foreign ones, exited following the signing of the bill into law.