BY SAM ALFAN
Kenyatta family bank investment is safe following court decision dismissing a challenge on one of its product.
The High court threw out the suit filed by Consumer Federation of Kenya who sought to stop Commercial Bank of Africa from charging its M-Shwari customers a higher interest rate on loans.
Justice Fred Ochieng said that Cofek did not show any false representations or unfair charges against CBA and they did not meet the threshold to file the petition.
Cofek had accused the Commercial Bank of Africa of selective compliance with new Banking Act 2016 which stopped banks from imposing high interest rates on loans.
They argued that the bank was using strange semantics such as ‘facilitation fees’ to levy an interest of 90 per cent per annum on its M-Shwari users as opposed to the 14.5 per cent.
The consumer agency said that the argument that M-Shwari is a special product for micro lending and is exempt from the provisions of the Banking Act is illogical as it falls flat against the principal-agency relationship.
“Dear customer, from 14/09/2016, your Mshwari deposit will earn interest of 7.35% p.a. being 70% of CBR. Loan facility fees remain unchanged at 7.5% per loan.” read the message CBA sent to its clientele on September 15, 2016.
The message led to Cofek moving to court to sue CBA alleging that they had violated the Banking Act 2016