KCB and its mobile money partner Safaricom have finally bowed to pressure to lower mobile money interest rates.

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This comes after the Consumers Federation of Kenya (CoFEK) expressed concern over the continued confusion around the law capping bank interest rates.

The consumer rights body had threatened court action if the banks-KCB and the Kenyatta owned CBA did not comply with the Banking Act, 2016 and lower their rates.

“The law is clear that it applies to all loans. Whether offered directly or indirectly, any loan from a licensee of the Central Bank of Kenya via an agent and or mobile phone or any other technology is not exempt from the 4% over and above the Central Bank Rate (CBR),” CoFEK said.

CoFEK said that both Commercial Bank of Africa (CBA) and Kenya Commercial Bank (KCB) were in breach of provisions of the Banking Act, 2016 “as they continue to manufacture excuses purporting that mobile phone based loans are exempt from the capping.”

The body said that this was a regrettable distortion of facts calculated to deny consumers their right.

“It must be condemned with the contempt it deserves.”

It added, “Equity Bank of Kenya claim that the Banking Act, 2016 does not apply on facilities with arrears is selfish and erroneous violation of the letter and spirit of the law. Consequently, we demand that the said banks fully comply with the law within 48 hours failing which we will institute a class action suit seeking among others.”

In the suit, CoFEK was seeking surcharge and arrest warrants for CBA’s Isaac Awuondo, KCB’s Joshua Oigara and Equity’s James Mwangi who are CEOs of the banks.

CoFEK was also pursuing refunds of the excessive interest charged on and after September 14, 2016 and also a general compensation as a result of injury and or losses in accordance with Article 46(1)(d) of the Constitution and false representation as defined under Section 12 of the Consumer Protection Act, 2012.

Soon after, Safaricom CEO Bob Collymore issued a statement commending KCB’s move.

“We welcome today’s decision by our partner KCB Bank Kenya to lower interest rates for the KCB mobile money product in line with the recently adopted Banking (Amendment) Act 2016.”

The statement said that all affected customers will be notified of these changes via SMS in coming days.