BY SAM ALFAN.
Consumers Federation of Kenya (COFEK) has initiated a legal battle with Commercial Bank of Africa for breaching the banking Act by charging higher rates in its Mshwari transactions.
COFEK claims that CBA through its loan transmitted via mobile phones is charging 90 per cent instead of 14.5 per cent known under the banking Act.
The applicant through lawyer Henry Kurauka, says that it has issued press statements calling on CBA to adhere to the banking regulation but the same has been ignored.
The bank has maintained that it will not comply with the Banking Act 2016, saying that 7.5 per cent its charging is not interest but facilitation fee.
The lawyer said that the partial compliance of the banking Act by CBA is occasioning deprivation of their clients’ money and cause suffering to many borrowers using the Mshwari product.
Both Central Bank of Kenya and CBA have conspired to abuse and contravene the provisions of Article 40 and 46 of the constitution, consumer’s products Act and the banking Act 2016, the applicant says.
“The continued denial of lower interest rate on Mpesa products hurts consumers and borrowers and the same should be halted by the court” lawyer said.
COFECK through its officials Stephen Mutoro, Ephaim Kanake and Henry Ochieng will at the hearing of the petition lodged at the High Court ask for a conservatory order to preventing CBA under the supervision of CBK from charging its Mshwari consumers an interest rate on loans that is higher than what is permitted under the banking Act.
The case will be heard on October 10.