Petition seeks to stop borrowers paying interest beyond loan principal

The National Assembly has received a petition seeking changes to the Consumer Protection Act to strengthen the in duplum rule, a safeguard meant to stop borrowers from paying interest charges that exceed the amount of the original loan.

Speaker Moses Wetang’ula told MPs that the petition was filed by Senior Counsel Allen Waiaki Kishore of Mwai & Allen Advocates. Kishore argues that although Section 44A of the Banking Act already provides for the in duplum rule — which states that “interest on a loan ceases to accrue once it equals the outstanding principal amount when a loan becomes non-performing” — in reality many borrowers continue to suffer under exploitative charges.

“The petitioner avers that the purpose of the rule is to protect borrowers from exploitation, prevent endless accumulation of interest, and encourage fair lending practices,” Wetang’ula said.

According to the petition, banks, financial institutions, and some lenders impose extra interest, penalties, and charges beyond the loan principal, violating borrowers’ rights under Article 46 of the Constitution. Borrowers are also exposed to harassment from debt collectors, conflicting court rulings on when the rule applies, and uncertainty over whether penalties should be treated as interest.

“The lack of clarity and enforcement undermines public confidence in the financial sector and violates national values under Article 10, especially transparency, accountability, and social justice,” the petition states.

The petitioner wants Parliament to amend the Consumer Protection Act to clarify when the rule takes effect, whether it applies to penalties and default charges, and to create uniform standards for debt restructuring and recovery. The petition also calls for redress for borrowers who have been subjected to unlawful charges, including refunds and settlements.

Speaker Wetang’ula confirmed that the matter falls under the authority of the House and is not before any court or constitutional body. He referred the petition to the Public Petitions Committee for review.

Emuhaya MP Omboko Milemba welcomed the petition and urged wider reforms.

“From what we see is that the banks, under the other lending institutions, still are very harsh on those who do borrow, and they have actually made it difficult for the local and simple people within the communities to do the borrowing,” he said.

He also raised concern about unregulated lenders.

“There are many mushrooming small financing institutions which are also giving loans to many Kenyans, but they are not being controlled or checked by this law. I think as the committee looks at this petition, you should consider roping in the other many lending institutions which are making it very difficult and catapulting the interest beyond what the borrowers can actually achieve,” Milemba added.