National Assembly petition seeks to stop banks from charging interest beyond loans
According to National Assembly Speaker Moses Wetang’ula, the petition argues that while Section 44A of the Banking Act provides that interest on a non-performing loan ceases once it equals the outstanding principal, borrowers still face exploitative charges in practice.
The National Assembly has been petitioned to amend a section of the Consumer Protection Act to ensure borrowers are not charged interest beyond the principal on their loans.
The move comes amid complaints that some banks and lending institutions continue to impose interest, penalties, and fees that exceed the original loan, leaving borrowers vulnerable to financial exploitation.
More To Read
- National Assembly, Senate returns from recess to tackle heavy legislative agenda
- Bill expanding Senate's powers sparks debate over oversight, budget control
- LSK flags risk of self-regulating county assemblies under new Bill
- Senate denies plans to extend presidential term limit, create office of Prime Minister
- MPs demand probe into Sh373m stalled amphitheatre project at University of Eldoret
- Executive undermining Parliament’s independence, says Kivutha Kibwana
The petition, submitted by Allen Waiaki Kishore, a senior counsel at Mwai & Allen Advocates, seeks to formally codify the “in duplum” rule, which limits interest accumulation to the original loan amount.
According to National Assembly Speaker Moses Wetang’ula, the petition argues that while Section 44A of the Banking Act provides that interest on a non-performing loan ceases once it equals the outstanding principal, borrowers still face exploitative charges in practice.
“The petitioner avers that the purpose of the rule is to protect borrowers from exploitation, prevent endless accumulation of interest and encourage fair lending practices,” Wetang’ula told the House on Tuesday.
Charges beyond loan principal
The petition also notes that banks, financial institutions, and unscrupulous lenders routinely impose interest, penalties, and other charges beyond the loan principal, exposing borrowers to violations of their rights under Article 46 of the Constitution. It further highlights harassment by debt collectors, inconsistent judicial interpretations on when the rule applies—whether before or after loan restructuring—and disputes over whether penalties count as interest.
“The lack of clarity and enforcement undermines public confidence in the financial sector and violates national values under Article 10, especially transparency, accountability and social justice,” reads the petition.
Wetang’ula added that the petitioner requests the House to amend the Consumer Protection Act to clarify when the in duplum rule takes effect, whether it applies to penalties, default charges, and other costs in addition to interest, and to establish uniform mechanisms for debt restructuring and recovery in compliance with the rule.
The petition also calls for mechanisms to redress borrowers subjected to unlawful interest charges, including refunds or settlements, as well as any measures that enhance consumer protection and uphold the Constitution.
The Speaker confirmed that the matter falls within the House’s authority and is not pending before any court or constitutional body. He committed the petition to the Public Petitions Committee for review in accordance with Standing Orders.
Welcoming the petition, Emuhaya MP Omboko Milemba urged broad regulatory reform.
“From what we see, banks and other lending institutions are still very harsh on borrowers, making it difficult for ordinary people in communities to access credit,” he said.
He also noted the proliferation of unregulated microfinance outfits and digital lenders.
“These many mushrooming small financing institutions are giving loans to many Kenyans without seeming to be controlled or checked by law,” he added.
Milemba called on the committee reviewing the petition to ensure that all lending institutions are included in regulatory reforms to prevent interest rates and charges that exceed borrowers’ repayment capacity.
Top Stories Today
