Fines should not exceed loan borrowed, Helb told

HELB CEO Charles Ringera. [David Gichuru, Standard]

The High Court in Nairobi has dealt a blow to the Higher Educations Loans Board (Helb) following a declaration that it is not entitled to recover an amount exceeding the principal advanced to a beneficiary.

Justice Alfred Mabeya in a judgment delivered last week issued a declaration that section 15(2) of the Helb Act is unconstitutional to the extent that it leads to interest rates and fines becoming more than the principal amount advanced.

The judge made the ruling in a suit filed by Anne Mugure, Davis Nguthu and Wangui Wachira against Helb. He said, Helb, by imposing interest amounts and penalties or fines that exceed the principal amount contravened the Constitution.

The judge said section 15(2) of the Helb Act is unconstitutional to the extent that it leads to interest rates and fines becoming more than the principal amount advanced.

“A declaration hereby issues that the respondent (Helb) is not entitled to recover from the petitioners or its loanees an amount exceeding double the amount advanced in contravention of the in duplum rule  (double rule),” read the judgment in part.

Mugure, Nguthu and Wangui in a suit filed in 2021 said they borrowed loans from Helb to facilitate their undergraduate studies. Helb, they noted, has been charging exorbitant interest and penalties which often grew beyond double the principal amounts owed thereby making repayment difficult.

On November 19, 2020, through its Twitter handle, Helb threatened to publish the names and photos in leading newspapers of defaulters since 1975 and issued a 30-day repayment notice. Mugure had borrowed Sh82, 980 in July 2004 at an interest rate of 2 per cent. As of July 2016, the debt had accumulated to Sh540, 464. Nguthu borrowed Sh146,090 in July 2016, and as of March 2021, the amount stood at Sh335,207, while Wangui borrowed Sh135,000 in July 2016 and as of February 2021, the amount due was Sh336,573.

They said the debts had doubled the principal amounts adding that the interest rates and penalties were exorbitant and contravened the beneficiaries’ socioeconomic rights as enshrined in the Constitution. The three said with non-performing loans they were denied clearances which were necessary for job applications.

Helb in a replying affidavit opposed the petition.

The board termed the petition as premature as it had not been granted an opportunity to address the concerns of the three.  The court in determining the case noted that the loanees of Helb facilities are helpless students who need help to finance their education.