Kenya: Petition Seeks Stricter Law to Curb Predatory Lending in Kenya

Nairobi — A fresh petition before Parliament is seeking tighter regulation of loan interest charges, amid growing concern over predatory practices by banks, digital lenders, and shylocks.

The petition, filed by lawyer Allen Waiyaki Gichuhi of Wamae & Allen Advocates, calls for amendments to the Consumer Protection Act, Cap. 501 to codify the in duplum rule — a legal principle that caps the interest on non-performing loans at an amount equal to the outstanding principal.

Speaker Moses Wetangula, while conveying the petition to the House, said the petitioner argued that despite the in duplum rule being recognised under Section 44A of the Banking Act, borrowers continue to suffer from lenders charging interests, penalties, and fees that exceed the loan principal.

“These practices have resulted in violation of consumer rights under Article 46 of the Constitution and exposed Kenyans to unfair deprivation of property,” Wetangula told MPs.

Kenya has seen an explosion of digital credit providers, many of whom have been accused of charging exorbitant rates, especially on motorbike riders and low-income borrowers. Calls to regulate the sector have intensified as borrowers struggle with mounting debt burdens.

The petitioner wants lawmakers to clarify when the in duplum rule takes effect, whether it covers penalties and default charges in addition to interest, and to establish uniform mechanisms for debt restructuring and recovery. He also proposes legal redress for borrowers subjected to unlawful charges, including refunds or set-offs.

The petition has been committed to the Public Petitions Committee for review, with a directive to report its findings to the House and the petitioner.

By Capital FM.