Money Markets
The Standard Chartered Bank, which was originally the target of the
class action suit over interest rates, has so far not made any
provisions for the case in its financial statements. PHOTO | FILE
By GEORGE NGIGI, gngigi@ke.nationmedia.com
In Summary
- Lawyers representing Rose Florence Wanjiru, the woman who initially went to court in 2003 challenging the legality of bank interest rates, said the advertisement they posted on local newspapers at the beginning of July had attracted 1,238 applicants.
- Borrowers had 45 days beginning July to register for inclusion in the suit whose hearing is expected to begin in the last quarter of the year.
- The Consumer Federation of Kenya said it was seeking to be enjoined in the case having received requests from individuals to represent them.
More than 1,200 past borrowers have joined the
long-running suit challenging the legality of interest rates that
commercial banks charged without the authority of Finance minister —
setting the stage for an epic court battle in the coming months.
Lawyers representing Rose Florence Wanjiru, the woman who
initially went to court in 2003 challenging the legality of bank
interest rates, said the advertisement they posted on local newspapers
at the beginning of July had attracted 1,238 applicants.
Borrowers had 45 days beginning July to register
for inclusion in the suit whose hearing is expected to begin in the last
quarter of the year.
Ms Wanjiru’s suit was initially filed against Standard Chartered Bank
but the court’s directive allowing other aggrieved borrowers to join in
opens the possibility that the local subsidiary of the UK bank will not
be a lone respondent when the hearing of the case begins.
The litigants are seeking a refund of all money
that the lenders levied without the approval of the Finance minister as
provided for by the Banking Act of 1989.
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 initially filed the case in 2003
challenging the legality of interest rates charged over a span of 25
years and in early July sought to have other affected borrowers enjoined
in the suit.
The Business Daily was unable to establish
the total amount of money that the litigants will be seeking from banks
but the high interest rate regime that has dominated the Kenyan loans
market and the long period of time they were charged means the lenders
would be facing a multi-million-shilling suit.
But that is not all. Any court decision in favour
of the litigants would set a precedent that could see thousands of other
aggrieved borrowers seek redress over the high cost of past loans.
The Business Daily Monday learned that Ms Wanjiru’s charged every applicant seeking to be joined in the suit Sh1,160.
“We filed our application on Friday but we are yet to get dates to progress,” said Samuel Gichuki, Ms Wanjiru’s lawyer.
Lawyers for the applicants said they had received
complaints on the longevity of some loans that the borrowers had
serviced for years but were still under pressure from the lenders who
have even issued notices of intention to auction property used to secure
the loans.
The Consumer Federation of Kenya (Cofek) said it
was seeking to be enjoined in the case having received requests from
individuals to represent them.
“We are in the process of being enjoined and hope
to do this by end of the week,” said Stephen Mutoro, the Cofek chief
executive.
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