From The Rio Times · Amina Diarra · · 1m 50s
Kenya Treasury Gives Up Bank Rate Veto
Kenya’s Treasury chief says banks should control interest rates instead of the Treasury.
In brief
Kenya’s Treasury chief says banks should control interest rates instead of the Treasury. Kenya’s Treasury will no longer approve banks’ interest rates, shifting power to the Central Bank of Kenya after court rulings. Originally reported by The Rio Times.
Kenya Treasury Chief Announces Rate Veto Change
Kenya’s Treasury chief, John Mbadi, says the Central Bank of Kenya should approve banks’ interest rates instead of the Treasury.
“Only the CBK has the capacity for oversight and checking compliance.”
Court Ruling Requires Treasury Approval
The Supreme Court ruled on 28 June 2024 that loan interest changes need Treasury approval under Section 44 of Kenya’s Banking Act.
Stanbic Bank Lost Supreme Court Case
Stanbic Bank Kenya lost a Supreme Court case that ordered it to refund over Sh10 million in extra interest charges.
High Court Suspends Section 44
A High Court judge temporarily suspended Section 44 pending the Kenya Bankers Association’s appeal in August 2026.
Banks Want Banking Act Reviewed
The Kenya Bankers Association wants the Banking Act reviewed to remove Treasury approval for interest rate changes.
CBK Governor Says Rates Should Be Independent
CBK Governor Kamau Thugge says monetary policy decisions should be implemented directly by banks without Treasury approval.
No Total for Potential Refunds
No total for possible refunds has been published, so the scale of exposure is unclear.
Unclear Timeline for Refund Bill
No date has been given for a refund bill to reach Parliament, and it is unknown whether past loans are covered.
Banks Seek Court of Appeal Decision
The Kenya Bankers Association is asking the Court of Appeal to overturn the High Court ruling that upheld Section 44.
What This Means for Investors
Investors in Kenyan bank shares should watch for refunds, as no total has been published for potential refunds.
In short
Kenya’s Treasury will no longer approve banks’ interest rates, shifting power to the Central Bank of Kenya after court rulings.
