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Section 44 of the Banking Act, Cap 488 (Banking Act), provides that no institution shall increase its banking or other charges without the prior approval of the Cabinet Secretary responsible for Finance (CS).
In 2006, the CS delegated these approval powers to the Governor of the Central Bank of Kenya (CBK) through Legal Notice No. 34 of 2006. This delegation has been disrupted by the Supreme Court’s decision in Stanbic Bank Kenya Ltd v Santowels Ltd [2024] KESC 31 (KLR) (Santowels Case), which has reignited debate on the proper scope of Section 44 and its interplay with the CBK’s constitutional independence.
21 August 26
Other Insights:
In the Santowels Case, the Supreme Court held that interest rates for loans fall within the phrase “rate of banking or other charges” under Section 44, and that banks must therefore obtain the CS’s approval before increasing them. While the decision strengthens consumer protection and statutory oversight, it raises fundamental questions about the CBK’s constitutional and operational independence under Article 231 of the Constitution.
In this legal alert, we examine a recent Supreme Court decision and its impact on the regulation of banking charges and interest rates.
Click here to download and read the full alert.
Should you have any questions regarding the information in this legal alert, please do not hesitate to contact Sonal Tejpar or Shelllomith Irungu.
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Contributors
1. Rose Georgina Onyango – Principal Associate
2. Lucy Kamau – Intern