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Depositors of Imperial Bank file new case against Central Bank of Kenya to have deposits worth Sh100 billion released

By Lee Mwiti | Published Mon, December 18th 2017 at 00:00, Updated December 18th 2017 at 09:21 GMT +3
Imperial Bank Head offices at Westlands, Nairobi. [PHOTO: BEVERLYNE MUSILI]

In summary

  • Release to us Sh100 billion, regulator told
  • Depositors blame collapse of bank on regulator
  • Law firm wants the court to compel CBK and the KDIC to unconditionally release the money

The depositors of Imperial Bank have filed a new case against the Central Bank of Kenya to have deposits worth Sh100 billion released.

The depositors, through MMC Africa Law, want the High Court to compel CBK and the Kenya Depositors Insurance Corporation (KDIC) to unconditionally release the money, claiming that the Central Bank has failed in its administrative duties of the fallen lender.

“As a State organ, the CBK has the obligation to observe, protect, promote, and fulfil the rights guaranteed in the Constitution. Additionally, the CBK and the KDIC are also bound by the national values and principles of Article 10, which include transparency, accountability, and good governance and CBK has failed in that end,” a petition filed by the depositors reads.

They have laid the blame for Imperial Bank’s collapse on CBK, arguing that by licensing the lender and annually renewing its permit, CBK was satisfied with its capacity to fulfil all statutory requirements embedded in the law.

Owing to the requirements under the Banking Act and the Prudential Guidelines, the petitioners claim that CBK is deemed to have known the activities at the bank even before its collapse.

Vetting

They further contend that had the CBK diligently carried out its statutory obligations of vetting bank officials to ensure compliance with the law, the bank would not have collapsed.

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They are also seeking declarations that the CBK and the KDIC violated their rights to fair administrative action, right to property, and right to consumer protection. They have asked the court to make orders that include immediate access to their deposits, interest, and damages.

Receivership

In October 2015, CBK placed Imperial Bank in receivership and subsequently, appointed KDIC as the receiver.

This was followed by the suspension of the lender’s banking activities, which included the locking up of the deposits that Imperial Bank held.

The depositors argue that by closing the bank without giving information, justification, or notice of the proposed administrative action to the petitioners, CBK and KDIC violated Article 47 that guarantees their right to fair administrative action.


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