KENYA · BANKING AND LAW
Kenya’s Treasury chief, the Cabinet Secretary (Kenya’s title for a minister) in charge of public finances, says his own ministry should lose the power to approve banks’ interest-rate changes. John Mbadi, the Cabinet Secretary for the National Treasury, said in an interview published on Monday 9 November 2026 that the Central Bank of Kenya (CBK), the banking regulator, should hold that power instead.
The change could ease the threat of refunds to borrowers who were charged rates the Treasury never approved, though it is unclear whether it would reach past loans. For US readers it matters to investors in Kenyan banks and to anyone who lends or borrows in Kenya.
Stanbic Bank Kenya, part of South Africa’s Standard Bank Group, lost the Supreme Court case that held Treasury approval is required. Court rulings since then have raised fears of a wave of lawsuits by borrowers.
Key Facts
- Proposal Mbadi wants the central bank, not the Treasury, to approve changes to commercial banks’ interest rates.
- Law Section 44 of Kenya’s Banking Act requires prior ministerial approval before banks raise rates or charges.
- Ruling Kenya’s Supreme Court held on 28 June 2024 that loan interest changes need Treasury approval.
- Court A High Court judge temporarily suspended Section 44 in August 2026, pending the banks’ appeal.
- Unknown No total for possible refunds, no date for a bill, and no word on past loans.
Kenya’s Treasury minister wants to give up a power that the courts say the law gave him. The open question is who pays for past rate rises.
What Mbadi Said
Mbadi called writing the power into law for the Cabinet Secretary “a mistake”. He said: “Only the CBK has the capacity for oversight and checking compliance.”
He also asked: “How would I oversee banks in terms of changes to interest rates?” The change would come through a review of the Banking Act, Kenya’s main law on lenders.
What Section 44 Says
Section 44 of the Banking Act says “no institution shall increase its rate of banking or other charges except with the prior approval of the Minister”. That minister is now the Treasury Cabinet Secretary.
For years, banks instead sought consent from the CBK. They relied on Legal Notice No. 35 of 2006, a government instrument that delegated the consent power to the CBK governor.
How the Courts Changed the Picture
In Stanbic Bank Kenya Ltd v Santowels Ltd (Petition E005 of 2023), the Supreme Court ruled on 28 June 2024 that loan interest changes need Treasury Cabinet Secretary approval under Section 44. The 2006 delegation notice, it held, did not remove the Cabinet Secretary’s responsibility.
Santowels, a sanitary-towel maker that took Stanbic to court, alleged that Stanbic charged it Sh17.25 million, in Kenyan shillings (about US$133,000 at Sh129.9 per US$, the market rate on 9 November 2026) in extra interest on loans from 1993 to 1997. It argued that Stanbic had varied the rates without seeking Treasury approval.
Stanbic was ordered to refund a customer more than Sh10 million (about US$77,000). Spire Bank, a Kenyan lender, was separately ordered to reduce a customer’s outstanding loan balance after a court found it had breached the law.
The Banks’ Court Fight
The Kenya Bankers Association (KBA), the banks’ lobby, challenged Section 44 as unconstitutional. It argued the section interferes with the CBK’s independence.
The High Court dismissed that case in December 2025. In August 2026, a High Court judge temporarily suspended Section 44 pending KBA’s appeal, saying refusing a stay could cause lasting disruption and widespread litigation over past interest.
KBA is now at the Court of Appeal seeking to overturn the High Court ruling. Its chief executive, Raimond Molenje, has said the CBK governor indicated that the Banking Act needs a comprehensive review.
Molenje said the risk-based credit pricing framework, the CBK’s system for pricing loans by borrower risk, should be written into the Act. That would remove the need for Treasury approval.
CBK Governor Kamau Thugge has told bankers that monetary policy decisions are independent and should be implemented directly by banks. The CBK expects lenders to vary loan rates as soon as it changes the Central Bank Rate, its benchmark rate, and it has held talks with banks on overhauling the Act.
What It Means for You
Investors in Kenyan bank shares should watch whether any refunds for past rate rises are limited. No total has been published, so the size of the risk cannot yet be judged.
Stanbic Bank Kenya belongs to Standard Bank Group of South Africa, so any refund bill sits inside a wider banking group. Kenyans abroad with loans at home may follow the cases, since the rulings turn on whether past rate rises had Treasury approval.
Clear rules on rate approval also shape credit costs. For the wider fiscal picture, see our reports on the Kenyan tax debate and tax-free pay for low earners, plus the Kenya hub; this is analysis, not investment advice.
What Is Not Known
No total for potential refunds has been published, so the scale of the exposure is unclear. No date has been given for a bill to reach Parliament.
It is not known whether the change would apply to past loans, which decides whether current claims survive. The remarks by Mbadi, Molenje and Thugge are as published, and we found no official transcript; the timing of the Court of Appeal’s decision has not been announced.
Frequently Asked Questions
Who approves bank interest-rate changes in Kenya today?
Under Section 44 of the Banking Act, the Treasury Cabinet Secretary must give prior approval, as the Supreme Court held on 28 June 2024. Mbadi wants the CBK to take over that role.
Why do borrowers matter in this dispute?
Courts found that lenders such as Stanbic and Spire breached the law on rate changes. That sparked fears of a wave of lawsuits by borrowers seeking refunds.
What are the banks asking the Court of Appeal?
The Kenya Bankers Association is asking the Court of Appeal to overturn the High Court ruling that upheld Section 44. A High Court judge has temporarily suspended the section, pending that appeal.
Sources: Banking Act (Cap. 488) Section 44; Supreme Court of Kenya judgment, Petition E005 of 2023 (28 June 2024), Kenya Law, the official law-reporting service; High Court rulings of December 2025 and August 2026; statements of the Treasury Cabinet Secretary, the Kenya Bankers Association and the CBK governor (read 9 November 2026).
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