Multinational Banks operating in the country are flagrantly abusing the law curbing the interest rates that commercial financial institutions operating on the Kenyan market are allowed to charge their customers.
In the process most of them appear to be operating with impunity in total disregard of the guidelines and regulations which were put in place by the regulator, the Central Bank of Kenya (CBK) in compliance with the requirements of the Banking (Amendment) Act of the Republic of Kenya 2016.
The law which came into force recently to bridle the highly exploitative runaway interest rates commercial banks were charging customers on loans in excess of 25 per cent that led to the rampant excesses of the institutions’ demanding from defaulting customers 100 times the principal amounts many customers had been loaned.
Most multinational banks like Barclays, Standard and Eco-bank continue to levy interest of more than 14.5% for customers in arrears as required by law. This is illegal and the CBK and the Director Public Prosecutions (DPP) must take action on these Rogue banks.
Indeed as a result Kenyans are being fleeced against the law higher interest applies. Some customers with arrears are still being charged 20.93% instead of 14.0%. To say the least Kenyans are suffering from this state of affairs when they are supposed to be enjoying a massive reprieve.
According to a letter from the Eco Bank signed by a Patrick Keta, the letter says only those without arrears to benefit as the rest will continue suffering from their illegal rates.
Keta says: “That following the enactment of the Banking (Amendment) Act 2016 the bank had reduced their interest rates to 14.50%,” that is instead of the minimum stipulated by the CBK of 14.05%.
He says that their new rates are comprised of the CBK’s 10.50% with a margin of 4% applied to all of the Kenya shillings denomination’s’ loans facilities that their customers may have been advanced but is silent on the dollar or other foreign currencies’ loans advanced.
This according to Keta are only applicable also to those customers whose accounts are up to date in terms of re-payment or loan servicing instalments and not any of those who are in arrears who will be subjected to their old exorbitant rates.
The Eco-bank official also states in the letter that the bank will also reduce the debit interest rates to 14% from 1st December 2016 with the value dated back to September 2016 without mentioning the specific date of the month, thus leaving loopholes for manipulation.
This he says will also include a margin of 4% but fails to articulate in detail how the bank is strictly following the new regulations published by the CBK which took effect immediately.