Nairobi, Kenya – Parliament has been petitioned to strengthen the in duplum rule under the Banking Act, a provision designed to shield borrowers from excessive loan interest charges but which, in practice, has failed to protect many Kenyans.
The rule, captured under Section 44A of the Banking Act, provides that once a loan becomes non-performing, the interest charged should not exceed the outstanding principal amount. However, borrowers continue to face mounting penalties, interests, and hidden charges that often push repayment far beyond the original loan.
Speaker Moses Wetang’ula informed the House on Tuesday that the petition, lodged by Senior Counsel Allen Waiaki Kishore, had been committed to the Public Petitions Committee for review.
In his petition, Kishore argued that the lack of clarity on the application of the in duplum rule has enabled banks, microfinance institutions, and digital lenders to exploit borrowers with impunity.
“The purpose of the rule is to protect borrowers from exploitation, prevent endless accumulation of interest, and encourage fair lending practices,” the petition read.
The Senior Counsel further noted that debt collectors have been pestering borrowers relentlessly, while courts have issued inconsistent interpretations of when the rule applies. Questions have also lingered on whether penalties and default charges should count as “interest.”
Kishore added that microfinance outfits, in particular, have been flouting the law by capitalizing on the ignorance of borrowers, worsening the debt burden for many Kenyans already struggling with economic hardships.
The petition urges Parliament to develop a clear framework specifying when the in duplum rule takes effect, whether penalties and fees are covered, and how lenders should comply during debt restructuring or recovery. It also calls for the establishment of redress mechanisms to refund or settle cases where borrowers have been unlawfully overcharged.
Finally, the petition proposes that amendments to the law be grounded in transparency, accountability, and social justice in line with Article 10 of the Constitution, which enshrines Kenya’s national values and principles of governance.
Speaker Wetang’ula affirmed the petition’s admissibility, noting that the matter was not before any court or constitutional body and therefore met parliamentary procedures for review.
