Bank are short-changing ordinary citizens by using the wrong rat in charging interest.
This is according to rights activist Okiyah Omtatah who says the banks should use the Kenya Banks’ Reference Rate (KBRR) and not the Central Bank Rate (CBR).
Omtatah has gone to court claiming that bank should use the KBRR as prescribed by the Central Bank for pricing of all loans or credit facilities.
He argues that in July this year, the Central Bank’s Monetary Policy Committee (MPC) retained the CBR at 10.5 per cent but lowered the KBRR from 9.87 percent to 8.90 per cent. This was effective from July 25, 2016.
Omtatah adds that the law requires banks to charge a maximum of 12.9 per cent based on the KBRR but they are ‘illegally’ charging 14.5 per cent based on the CBR benchmark at 10.5 per cent, according to the Nation.
He claims that several banks have violated Section 33B (1) (a) and (b) of the Banking (Amendment) Act. He has also accusing the CBK of abetting breaking the law by the Kenya Bankers Association (KBA).
In the petition being heard today, Omtatah wants CBK and KBA ordered to ensure that the rates are capped based on the KBRR and not on the CBR.