Court allows Equity client to audit ‘overcharged’ loan accounts

An Equity Bank customer has gone to court complaining that the lender had deducted illegal interests and penalties and was not transparent on the loan disbursements.

Ms Keziah Ndirangu demanded that her six accounts at the lender be audited by a court appointed accountant to determine the amount of loan or loans she has taken, the repayments made and the interest and penalties imposed.

She called on the court to determine the legality of such interest and penalties and determine any over payment.

Equity Bank, however, said the suit was meant to help the client avoid paying her loans.

The bank said Ms Ndirangu sought Kes15 million loan in 2010 which was secured by a First Legal Charge over her property LR. No. Kabete/Mwimuto/T.48.

Read also: Desperate woman offers Equity Bank Sh5,000 daily to stop auction

She later approached the bank for two further charges over the same security but she has failed to service the loans as agreed, thereby leading to the issuance of the statutory notices.

The court, however, ruled in favour of Ms Ndirangu stating that the audit will be carried out by an accountant, who will be better placed to understand the workings of the banks in as far as tabulating the loan accounts is concerned.

“My finding is that the nature of the orders sought by the applicant herein will not prejudice the defendant in any way but will assist the court, and the parties, in arriving at the true status of the applicant’s loan accounts,” Judge Wilfrida Okwany said.

Kenyan borrowers have found themselves hit by penalties for not being vigilant as lenders change repayment terms, extend deductions past conclusion of repayment period while also imposing arbitrary charges.

Complaints at the Competition Authority of Kenya shows that if you do not follow the schedule of payments you are likely to be overcharged.

Patience Kwekwe reported Harambee SACCO alleging that she took a loan at an interest rate of 12 per cent which she was to repay in 34 months. She cleared the loan in June 2015.

When in December, 2017, she applied for a new loan from the same SACCO she was informed that she still owed the lender Kes200,000 which was recovered from her savings without her knowledge.

The Sacco was penalized Kes38,379.85 which is 10 per cent of the principal amount of the loan amounting to Kes336,000.

Ms Kwekwe’s loan was also re-calculated the alleged loan arrears was cancelled and shares were restituted.

Stella Ndung’u complained that her parents took a loan from Faulu Micro-finance in June, 2013 at an interest rate of 12 per cent but the bank adjusted it in 2016 to 16 per cent.

Further, upon their calculation, the actual interest rate was about 30 per cent and not 16per cent or 12 per cent as purported by Faulu.

CAK established that there was misrepresentation regarding flat rate and reducing balance rate  of  interest that was presented to Ms Ndung’u.

The anti-trust body even engaged the Central Bank of Kenya to get an expert opinion on the calculation of interest rates.

Faulu Microfinance Bank also opted to settle the matter and were penalized Sh150,000. Other remedies included waiving all penalty interest accruing to the complainant.

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