Share in Kenyan banks have suffered the worst fall in years over the last one week after President Uhuru Kenyatta unexpectedly signed a legislation capping interest rates on loans and deposits.

Share price in more than half of banks listed on the Nairobi Securities Exchange fell to their one-year low by the end of last week as investors reacted to the news that the cost of credit had been capped.

“Investors are pricing in the worst possible scenario. The reality is that we have a prudent Central Bank of Kenya and even application of the law may not go for worst,” Nairobi-based Standard Investment Banks (SIB) said in a market note.

Data compiled by Standard Investment Bank (SIB) analysts shows that turnover slumped 30.3 percent week-on-week as foreign investor trading declined by 10.2 per cent, Standard Digital reported.

The Kenyan president shocked the countries financial markets mid last week after he signed a legislation that imposes limits on commercial bank rates.

Under the new law, lending rates will be capped at four percentage points above the benchmark central bank rate, which is currently 10.5 per cent, while deposit rates must be at least 70 per cent of the benchmark rate, Financial Times reported.

Currently, the maximum lending rate any lender give is capped at 14.5 percent and deposits would fetch as high as 7.35 percent. This is a departure from before when banks charges as much as 25 percent on loans and gave a maximum of 3 percent on deposits.

Businesses in the East Africa’s largest economy have for long complained of the high cost of credit that made it difficult for many to afford loans.

Kenya has one of the widest interest rate spread – the difference between loan and deposit rates – in sub-Saharan Africa.

“Despite having one of the most efficient and effective financial markets, Kenya has one of the highest returns-on-equity for banks in the African continent. Banks need to do more to reduce the cost of credit and ensure that the benefits of the vibrant financial sector are also felt by their customers,” Kenyatta said in a statement.

His decision to ascent to the interest rate capping law has been hailed by some analysts, while others described it as populist and ignored market trends while focusing on endearing Kenyatta to the electorate ahead of the general election next year.