Equity Bank faces most complaints in class action suit
An Equity Bank branch in Nairobi. The court has so far enjoined 187 borrowers who claim to have been slapped with illegal interest charges by banks. PHOTO | FILE
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Forty two individuals and companies want compensation from the bank out of the total 187 claimants who have sued for alleged illegal interest charges slapped on them while they were repaying their loans.
Equity Bank is facing the highest number of complaints in the ongoing class action suit against lenders, in which nearly 200 borrowers are seeking compensation for interest rates that were charged on loans without the Finance minister’s approval as required by the law.
Forty two individuals and companies want compensation from the bank out of the total 187 claimants who have sued for alleged illegal interest charges slapped on them while they were repaying their loans.
Among the complainants in the suit is billionaire businessman Horatius Da Gama Rose and the Esther Passaris owned advertising firm Adopt-A-Light.
The firm has been engaged in protracted legal battles against the lender since 2013 over a botched publicity contract. Barclays Bank is facing the second-highest number of complaints at 37 while Kenya Commercial Bank follows with 34 complaints against it.
The suit was filed by businesswoman Rose Florence Wanjiru in 2003 in a bid to get Sh39,000 compensation for interest allegedly charged illegally on her loan account with Standard Charted Bank.
She sued all commercial banks in Kenya through their lobby, the Kenya Bankers Association (KBA).
The court has so far enjoined 187 borrowers who claim to have been slapped with illegal interest charges by their individual banks.
Also enjoined in the suit is the late Cabinet minister Joab Omino, who is represented by the administrators of his estate. Mr Omino’s kin are among 23 clients demanding that National Bank of Kenya refunds interest they claim not to have owed.
Some collapsed companies that blame illegal interest charges on their woes have also been enjoined in the case.
Justice Francis Gikonyo last week allowed businessman Da Gama Rose to join the suit in a bid to prove that Bank of Baroda placed two of his firms — Printing Industries Limited and Multiple Industries Limited — under receivership in 2008 based on inflated charges that had not been approved by the Finance minister.
Mr Da Gama Rose, who is at the centre of a separate suit fighting to retain ownership of the controversial 134-acre Karen land valued at an estimated Sh8 billion, hopes to use the suit to rescue the two companies.
The law provides that “no institution shall increase its rate of banking or other charges except with the prior approval of the minister.”
Ms Wanjiru’s petition was dismissed in 2003 on a technicality but it was reinstated in October 2013 when the Court of Appeal ruled that the High Court erred in its decision to dismiss it.
Justice Gikonyo’s admittance of 187 parties to the suit comes as an application by the KBA seeking to strike out the entire suit is pending determination by the Supreme Court.
KBA says Ms Wanjiru was wrong in failing to seek permission from the court before suing lenders through the KBA chairman.
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