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Commercial banks and microfinance institutions risk withdrawal of licences or ouster of directors if found in violation of consumer rights.
This is after the Central Bank of Kenya (CBK) sought to investigate the lenders violating the rights through breaches like hidden charges, false information or advertisement, among others.
CBK said those found in violation of CBK guidelines on consumer protection will be fined KSh 5 million, and workers involved face KSh 200,000 penalty.
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According to Business Daily, a CBK consultant will pose as a customer and conduct an investigation in the banking halls.
There have been complaints from customers over arbitrary increases in charges, interest on loans and hidden fees.
Previous studies by the Financial Sector Deepening (FSD) raised an alarm over malpractices, including hidden charges subjected to consumers by lenders.
The reports showed that most of the information provided by the lenders is outdated or incomplete.
CBK guidelines protect bank customers from unfair practices and services by various lenders.
Lenders should provide full and accurate details of their charges, including interest rates, to the customer via branches, websites and product promotion channels like brochures.
In 2021, CBK flagged nine banks over non-compliance with the set guidelines and rules.
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In separate news, TUKO.co.ke reported that CBK raise the base lending rate to 7.5% in May 2022, a move that could see borrowing rates increase.
This means lenders could adjust their interest rates on loans.
The announcement came at the backdrop of increasing inflation in the country as prices of basic food commodities continued to rise.
CBK Monetary Policy Committee (MPC) reviewed and announced it had raised the base lending rate by a quarter percentage.
The committee cited elevated risks to the inflation outlook and supply chain disruptions as the main reasons that informed the decision to raise the base lending rate from 7% to 7.5%.
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Source: TUKO.co.ke
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