Man wants bank interest rate capping law suspended

A Nairobi resident has moved to court seeking to have the new law that regulates interest rates on bank loans suspended.

Mr Boniface Oduor has sued the Central Bank of Kenya, the Kenya Bankers Association and the Attorney General challenging the Banking Act which was signed into law by President Uhuru Kenyatta in August.

Mr Oduor claims in the case filed at the High Court on Wednesday that the Act is discriminatory to banks and financial institutions.

Through lawyer Miller Bwire, Mr Oduor argues that the law fails to prescribe penalties for non-compliance, terming it ambiguous.

He also faults the fact that the Senate was not involved in debating and passing the Bill, adding that the responsibility of formulating and implementing monetary policy lies with the CBK and not the National Assembly.

“The open breach and defiance of the Constitution should not be allowed to continue as it is likely to cause instability in the financial markets to the detriment of the entire country,” Mr Bwire said.

According to Mr Oduor, the Act is unconstitutional since it was not jointly considered by Speakers of both the National Assembly and the Senate.

He argued that the National Assembly has no power to direct or control the CBK in formulating or implementing monetary policy.

He also claims that law does not promote sustainable development, human dignity and equality and it deprives bank CEOs the right to freedom and security.

“Unless conservatory orders are made and the case herein is heard and determined urgently, Kenyans’ rights will continue to be violated, this must not be permitted at all costs,” he says.

He argues that capping interest rates at four per cent above the CBR is an interference with market stability.

The Banking Act was passed in the National Assembly on July 28 and came into force on September 14.

Mr Oduor wants the Act declared null and void.