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Consumer lobby to challenge court verdict on cheap loans : The Standard

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Consumer Federation of Kenya Secretary General Stephen Mutoro in Nairobi in December 2018. [Jonah Onyango, Standard]

Consumer Federation of Kenya (Cofek) plans to appeal the recent ruling declaring the law on interest rate cap unconstitutional.

The consumer lobby yesterday filed a notice of appeal challenging the March 14 ruling that declared some sections of the Banking (Amendment) Act that put a ceiling on the price of loans null and void. Debate on the ruling, which caught many borrowers by surprise, will now move to the Court of Appeal and not to the floor of the National Assembly as had been directed by the High Court.  
“Take notice that the Consumers Federation of Kenya, the second interested party, being dissatisfied with part of the argument of Justices Tuiyot, Kamau and Ngetich, J J, delivered at the High Court of Kenya and Nairobi on the 14th day of March 2019 intends to appeal to the Court of Appeal against the said judgement,” read in part the notice.
Cofek termed the ruling grossly defective, adding that the Central Bank of Kenya (CBK) and Kenya Bankers Association (KBA) – the two respondents in the petition by Boniface Oduor – might have had a hand in the case.

SEE ALSO :Blow to Swazuri team in land row

“Indeed it is clear that the petitioner, one Boniface Oduor, does not represent the interest of bank customers but those of CBK and KBA,” said Cofek Secretary General Stephen Mutoro in the notice.
“Further, it is public knowledge that both CBK and KBA have had several press conferences and skewed mainstream media commentaries in their bare-knuckled constant attacks on the interest rate capping. To then turn around to sue CBK over the Banking (Amendment) Act, 2016 is to confirm that the suit was not only defective but mischievous.” 
The High Court ruling is the latest attempt at ending the era of cheap loans by institutions led by banks, Treasury and CBK.
Analysts say unlike in 2016 when the proposals might have found the groups unprepared, this time around they will deploy their best lobbying machinery as they seek a liberal price setting regime on loans.
MPs, however, insist they are only championing public interest and will do even more when they start debating the law. Kiambu Town MP Jude Njomo, the man who brought to Parliament the amendments that resulted in the Banking (Amendment) Act, 2016, said Parliament has the mandate to address matters of public interest, and a cap on the price of loans was one of them.

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SEE ALSO :Court says internet shutdown during protests, illegal

“The court did not consider the spirit of the law, they considered the technicalities,” he said at the weekend.
Boniface Oduor, the petitioner, has asked the court to determine the constitutionality of the provisions of the Banking (Amendment) Act No. 25 of 26, which criminalises charging of interest rate by financial institutions at more than four percentage points above the Central Bank Rate (CBR) set and published by Central Bank of Kenya.
The court agreed with the petitioner but gave Parliament a year to iron out the unconstitutionality in the law, setting the ground for a fierce economic battle between protectionists and liberals in the country.
“Mindful of the possible ramifications and disruption on existing contractual relationships between banks and their customers, the court suspends the effect of the declaration for 12 months from the date of this decision to give the National Assembly an opportunity to reconsider the provisions,” the judges ruled.
They said section 33B (1) and (2) of the Act, providing for CBK to regulate how much lenders can earn from customers, was “vague, imprecise, ambiguous and indefinite.”

SEE ALSO :Lawyer sues Maraga, JSC over ‘poor planning’

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World Bank pushes G-20 to extend debt relief to 2021

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World Bank Group President David Malpass has urged the Group of 20 rich countries to extend the time frame of the Debt Service Suspension Initiative(DSSI) through the end of 2021, calling it one of the key factors in strengthening global recovery.

“I urge you to extend the time frame of the DSSI through the end of 2021 and commit to giving the initiative as broad a scope as possible,” said Malpass.

He made these remarks at last week’s virtual G20 Finance Ministers and Central Bank Governors Meeting.

The World Bank Chief said the COVID-19 pandemic has triggered the deepest global recession in decades and what may turn out to be one of the most unequal in terms of impact.

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People in developing countries are particularly hard hit by capital outflows, declines in remittances, the collapse of informal labor markets, and social safety nets that are much less robust than in the advanced economies.

For the poorest countries, poverty is rising rapidly, median incomes are falling and growth is deeply negative.

Debt burdens, already unsustainable for many countries, are rising to crisis levels.

“The situation in developing countries is increasingly desperate. Time is short. We need to take action quickly on debt suspension, debt reduction, debt resolution mechanisms and debt transparency,” said Malpass.

ALSO READ:Global Economy Plunges into Worst Recession – World Bank

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Kenya’s Central Bank Drafts New Laws to Regulate Non-Bank Digital Loans

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The Central Bank of Kenya (CBK) will regulate interest rates charged on mobile loans by digital lending platforms if amendments on the Central bank of Kenya Act pass to law. The amendments will require digital lenders to seek approval from CBK before launching new products or changing interest rates on loans among other charges, just like commercial banks.

“The principal objective of this bill is to amend the Central bank of Kenya Act to regulate the conduct of providers of digital financial products and services,” reads a notice on the bill. “CBK will have an obligation of ensuring that there is fair and non-discriminatory marketplace access to credit.”

According to Business Daily, the legislation will also enable the Central Bank to monitor non-performing loans, capping the limit at not twice the amount of the defaulted loan while protecting consumers from predatory lending by digital loan platforms.

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Tighter Reins on Platforms for Mobile Loans

The legislation will boost efforts to protect customers, building upon a previous gazette notice that blocked lenders from blacklisting non-performing loans below Ksh 1000. The CBK also withdrew submissions of unregulated mobile loan platforms into Credit Reference Bureau. The withdrawal came after complaints of misuse over data in the Credit Information Sharing (CIS) System available for lenders.

Last year, Kenya had over 49 platforms providing mobile loans, taking advantage of regulation gaps to charge obscene rates as high as 150% a year. While most platforms allow borrowers to prepay within a month, creditors still pay the full amount plus interest.

Amendments in the CBK Act will help shield consumers from high-interest rates as well as offer transparency on terms of digital loans.

SEE ALSO: Central Bank Unveils Measures to Tame Unregulated Digital Lenders

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Scope Markets Kenya customers to have instant access to global financial markets

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NAIROBI, Kenya, Jul 20 – Clients trading through the Scope Markets Kenya trading platform will get instant access to global financial markets and wider investment options. 

This follows the launch of a new Scope Markets app, available on both the Google PlayStore and IOS Apple Store.

The Scope Markets app offers clients over 500 investment opportunities across global financial markets.

The Scope Markets app has a brand new user interface that is very user friendly, following feedback from customers.

The application offers real-time quotes; newsfeeds; research facilities, and a chat feature which enables a customer to make direct contact with the Customer Service Team during trading days (Monday to Friday).

The platform also offers an enhanced client interface including catering for those who trade at night.

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The client will get instant access to several asset classes in the global financial markets including; Single Stocks CFDs (US, UK, EU) such as Facebook, Amazon, Apple, Netflix and Google, BP, Carrefour;  Indices (Nasdaq, FTSE UK), Metals (Gold, Silver); Currencies (60+ Pairs), Commodities (Oil, Natural Gas).

The launch is part of Scope Markets Kenya strategy of enriching the customer experience while offering clients access to global trading opportunities.

Scope Markets Kenya CEO, Kevin Ng’ang’a observed, “the Sope Markets app is very easy to use especially when executing trades. Customers are at the heart of everything we do. We designed the Scope Markets app with the customer experience in mind as we seek to respond to feedback from our customers.”

He added that enhancing the client experience builds upon the robust trading platform, Meta Trader 5, unveiled in 2019, enabling Scope Markets Kenya to broaden the asset classes available on the trading platform.

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