Nairobi — A Nairobi-based petitioner has moved to the High Court seeking orders to stop commercial banks from unilaterally increasing loan interest rates, penalty charges and other borrowing costs imposed on customers.
In the case filed before the High Court in Nairobi, Francis Awino is seeking conservatory orders against the Central Bank of Kenya (CBK), the Attorney General and the Kenya Bankers Association acting on behalf of commercial lenders.
Awino argues that banks have continued to exploit contractual provisions to adjust lending rates and impose additional charges without meeting the legal threshold set out under Section 44 of the Banking Act and constitutional principles governing fairness, accountability and transparency.
The petitioner wants the court to bar banks, pending determination of the case, from implementing upward loan repricing, default penalties, risk-based pricing adjustments or any related charges based solely on clauses contained in loan agreements.
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According to court documents, the petition challenges what Awino describes as opaque and unfair lending practices that allegedly expose borrowers to arbitrary financial burdens without adequate regulatory oversight.
He contends that financial institutions should not be allowed to rely on standard-form contracts to circumvent constitutional consumer protections and statutory safeguards regulating interest rate adjustments.
Awino is also seeking orders compelling the CBK and the Kenya Bankers Association to disclose and publish detailed information on lending practices between 2024 and 2026.
The information sought includes effective lending rates, loan repricing mechanisms, penalty and default charges, collateral recovery data, and the regulatory or internal policies used by banks when revising customer loan terms.
The petition further seeks disclosure on the proportion of commercial banks' investments in government securities compared to lending to the private sector, including supervisory policies guiding such allocations.
Awino argues that the current banking model violates Article 47 of the Constitution on fair administrative action, describing the system as procedurally unfair, unreasonable and lacking transparency.
He also claims that unilateral interest rate adjustments and hidden repricing mechanisms infringe on consumer rights protected under Article 46 as well as economic and property rights guaranteed under Articles 40 and 43 of the Constitution.
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According to the petition, Section 44 of the Banking Act cannot be overridden by contractual clauses drafted by lenders and imposed on borrowers.
Awino is urging the court to stop banks from penalising, auctioning, listing or repossessing borrowers over disputed interest rate increments unless authorised by the court.
He maintains that continued enforcement of the contested lending practices risks causing widespread financial and constitutional harm to borrowers, depositors, homeowners and small businesses across the country.
