Activist sues banks over loan interest rates hike

Recently, the Central Bank of Kenya retained the benchmark lending rate at 8.75 per cent. [File, Standard]

A petition has been filed at the High Court seeking to stop commercial banks from unilaterally increasing interest rates, default charges and other loan-related fees imposed on borrowers.

In the case filed before the High Court, activist Francis Awino has sued the Kenya Bankers Association (KBA), challenging the manner in which banks adjust interest rates.

In the petition, Awino wants the court to issue conservatory orders suspending what he terms as arbitrary increases in borrowing costs pending the hearing and determination of the case.

“Pending the hearing and determination of the application or petition, the court do issue conservatory orders suspending the unilateral increase of interest rates, default charges and other loan related fees by commercial banks," Awino seeks adding that the practices have continued to burden borrowers amid tough economic conditions.

The petitioner argues that commercial banks across the country have allegedly continued to revise loan charges without adequate public participation, transparency or proper consumer protection safeguards.

Awino further argues that despite the recent easing of the Central Bank Rate (CBR), many borrowers have not benefited from reduced lending rates, with some banks allegedly maintaining high charges and penalties on existing facilities.

The petition comes against the backdrop of recent monetary policy decisions by the Central Bank of Kenya (CBK), which retained the benchmark lending rate at 8.75 per cent.

Documents attached to the case include a Monetary Policy Committee statement chaired by CBK Governor Kamau Thugge, which defended the decision to retain the rate.

“The current monetary policy stance, with the Central Bank Rate unchanged at 8.75 per cent, remains appropriate to ensure that inflation expectations remain anchored within the target range, and the exchange rate remains stable,” the committee stated.

The committee warned that global oil prices, supply chain disruptions and geopolitical tensions in the Middle East continued to pose inflationary risks to the economy.

A separate research notes by KBA also supported retaining the rate, warning of “imminent inflationary and potential exchange rate pressure arising from the geopolitical conflicts.”

High Court Judge Bahati Mwamuye has directed the petitioner to serve the respondents with the application, petition and supporting documents by May 29, 2026.

Responses are to be filed by June 12 while the matter will be mentioned on July 2, 2026 for further directions.