COFEK appeals against removal of interest rates capMay 22, 2019
NAIROBI, Kenya, Mar 18 – The Consumer Federation of Kenya (COFEK) has filed an appeal challenging the judgement of the High Court that removed the cap on interest rates.
The Federation through lawyer Henry Kurauka, says the move will affect many Kenyans who may not afford the interest rates to be charged by banks.
“The banks need to be controlled so as to give low income earners the opportunity to take bank loans for their development,” he said.
The High Court in its landmark judgement, also declared unconstitutional section 33B (1) that gave CBK the power to give clearance to transact the foreign exchange business. The section, provided that such individuals must apply and obtain licences from the CBK before commencement of transactions.
Justice Francis Tuiyot, Jackline Kamau and Rachel Ngetich, further declared unconstitutional provisions under section 33 (2) that require payments in order for one to be issued with licences.
The court found that this section of the Banking Act to be vague, imprecise, ambiguous and indefinitely attracts penal consequences.
The judges further noted that the sections violate Articles 29 and 50 of the Constitution that gives persons the right to freedom.
The court effectively suspended the Act capping interest rates for a period of 12 months to give National Assembly opportunity to reconsider the provisions.
The judge however said that pending the reconsideration by the National Assembly, the circular No 4 of 2016 issued by CBK will continue to provide measures of clarity to the impugned provisions.
The judges gave the judgement in a petition filed by Boniface Oduol, which sought to declare section 33B of the Banking Act unconstitutional.