More brows for banks as activist demand that the government lowers their rates more.
Okiya Omutata moved to court challenging the new bank interest saying that the
14.5 % interests charged by the Kenyan Bankers association is
unconstitutional and too high.
Omutata says that banks have errored in capping interest rates using the Central Bank Rates (CBR) and not the Kenya Banks Reference Rate
“The law requires the respondent to charge a maximum of 12.9% (being
the KBBR at 8.9 %+4 %),” states Omutatah.
He contests that the difference between the interest rates
prescribed by law and what is charged by the banks is as whooping 1.6 %.
In his petition filed at the Milimani Law court, Omutata says that the
usurious state of affairs is unconstitutional and therefore unacceptable.
It unfairly enriches the lenders, he says adding
that it arbitrarily deprives borrowers of their property contrary to article 40 of the constitution.
He wants interest rates be capped based on the KBBR and not on the CBR.
Omutatah also accuses Central Bank of Kenya of ignoring the move by banks.
“Unless the application is urgently heard and determined, the
applicant and the people of Kenya will suffer great loss as the
constitution continues to be violated,” he claims.
The new law, signed by President Uhuru Kenyatta last month regulates applicable rates to bank loans and deposits capping the interest that banks can charge on loans and
Major banks in the country have already adjusted to the new loan interest rates.