COFEK to appeal against removal of interest rates cap

COFEK Chairman Stephen Mutoro. [Photo: File]
NAIROBI, KENYA: Consumer Federation of Kenya (COFEK) has vowed to oppose the ruling that seeks to scrap bank interest rates.

Judges Francis Tuiyot, Jackline Kamau and Rachael Ngetich last week ruled that a section of the Banking Amendment Act 2016 that gives the Central Bank of Kenya authority to set interest rates disrupts the existing relationship between banks and their customers.

The judges said that Section33(b)1 and 2 have been suspended for 12 months to give National Assembly an opportunity to reconsider the existence of the provisions.

But COFEK is reading malice in the ruling and have vowed to oppose it.

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"We have today filed our notice of appeal of the ruling by Justices Tuiyot, Kamau and Ng’etich as delivered on March 14, 2019, and which ruling purported to scrap bank interest rates capping in years’ time," COFEK Secretary General Stephen Mutoro said.

He said in COFEK's view, the ruling was grossly defective, suspect and one that raises serious integrity questions on the part of Central Bank of Kenya (CBK) and Kenya Bankers Association (KBA).

"Indeed it is clear that the petitioner, one Bonfas Oduor, does not represent the interest of bank customers but those of CBK and KBA. Further, it is public knowledge that both CBK and KBA have had several press conferences in their bare-knuckled constant attacks on the interest rate capping," Mutoro said.

To then turn around to sue CBK over the Banking (Amendment) Act, 2016 Mutoro said, is to confirm that the suit was not only defective but mischievous.

"If Mr Oduor was honest, he would have sued the National Assembly, not CBK. Be that as it may, it was also curious that the honourable Judges chose to release to the media details of a ruling that was not ready. Media did not sue. Our conviction is that the ruling has no legs to stand on. It will form a bad precedent in the statutes. It must not be allowed to stay," Mutoro said.

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He said that claiming a law is “vague, imprecise, ambiguous and indefinite” is debatable and does not invalidate it as there is no specificity, clarity on how it contradicts any part of the Constitution.

"In any case, the ruling cannot purport to transfer the legislative powers vested on Parliament, under Article 94, to the CBK.  It is for this reason that we eagerly await the full ruling to demonstrate that the honourable Judges struggled to arrive at a conclusion that would be difficult to objectively justify," Mutoro said.

He said the federation has been in touch with Hon Jude Njomo, MP for Kiambu, to request that the House adjourns tomorrow, (today, March 19, 2019) to discuss the development as a matter of national importance. 

"Finally, we confirm that we will contest plans by the Director of Public Prosecutions Noordin Haji to allow for plea taking on the Chief Executive Officers of5 banks who were involved in the National Youth Service scam. They must be charged," Mutoro said.

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COFEKBank Interest RatesBonfas Oduor