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Kenyan Members of Parliament have begun reviewing a petition that seeks to restrict loan interest so that it never exceeds the original amount borrowed. The move comes as concerns grow over the rise of exploitative lenders in the country who impose excessive repayment charges on borrowers, leaving many citizens in deep financial distress.
The petition was filed by senior lawyer, Mr. Allen Waiaki Kishore, and presented to the National Assembly for consideration. The lawyer is calling for amendments to the Consumer Protection Act to include the in duplum rule in clear terms, so it can be effectively enforced across the financial sector.
The in duplum rule is a legal principle that states that if unpaid interest on a loan grows to equal the principal amount, no further interest should be charged until part of the original loan is repaid. This principle has existed in Kenya’s Banking Act under Section 44A, but enforcement has remained weak, allowing lenders to continue charging interest and penalties far beyond the principal.
Although the rule was historically applied to banks, recent court judgments have expanded its coverage to other lenders, including microfinance institutions, Savings and Credit Cooperatives (SACCOs), digital lending platforms, and even private individuals who provide loans. According to Mr. Kishore, the purpose of the rule is to protect borrowers from financial exploitation, prevent endless accumulation of debt, and encourage fair lending practices in the country.
Despite this legal protection, many banks and lenders still impose hidden charges, penalties, and default fees that push borrowers into paying more than double what they originally took as a loan. Borrowers have also raised complaints of harassment from debt collectors, especially in the digital lending space where apps send messages to borrowers’ family and friends to shame them into repayment.
The courts have not provided consistent guidance on the application of the rule. In some cases, questions have been raised over whether the in duplum rule should apply before or after a loan is restructured, and whether penalties and extra fees should be treated as part of the interest. This lack of clarity, according to the petition, has left ordinary Kenyans exposed to financial exploitation.
The petition is also asking lawmakers to define when exactly the in duplum rule should take effect, clarify if it applies to other charges apart from interest, and to establish a system through which borrowers can recover money already overcharged by lenders. Mr. Kishore argued that the absence of clear enforcement measures undermines public confidence in Kenya’s financial sector and goes against national values under Article 10 of the Constitution, which emphasizes transparency, accountability, and social justice.
The petition has now been referred to the Public Petitions Committee of the National Assembly for further review, marking a formal step toward potential legislative changes. However, experts say its actual impact will depend on whether Parliament can strike a balance between protecting borrowers and ensuring lenders can still operate in a viable market.
Kenya’s lending industry has expanded rapidly in recent years, especially through digital lending platforms that provide quick loans through mobile applications. While these platforms have improved access to credit for many people, they have also been accused of charging interest rates that can go above 100 percent annually, far beyond what borrowers can reasonably repay. This has worsened the problem of debt traps in the country.
Last month, Embakasi East MP, Mr. Babu Owino of the Orange Democratic Movement (ODM), announced that he will also push for separate legislation to address exploitative lending practices, especially on consumer items like motorcycles and mobile phones. He noted that many Kenyans who purchase these items on credit end up paying two or three times the original cost, due to hidden charges and inflated interest. According to him, such practices have driven many households into misery, despite existing laws meant to protect consumers.
The push in Parliament reflects a growing national concern about predatory lending, particularly in the informal sector where regulation is weaker. Many ordinary Kenyans continue to rely on quick loans to meet daily expenses, school fees, or emergency needs, but they often find themselves trapped in cycles of debt due to the high cost of credit.
As lawmakers consider this petition, analysts say the outcome could shape the future of lending in Kenya, setting a precedent for other African countries facing similar challenges with unregulated lenders. If Parliament agrees to codify and enforce the in duplum rule across all lending platforms, it could reduce the burden on borrowers and restore confidence in the financial system. However, the financial sector may resist the changes, warning that stricter rules could reduce access to credit.
For now, the petition represents a fresh attempt to address long-standing complaints from Kenyan borrowers who say they are unfairly treated by lenders, despite the presence of consumer protection laws. The debate is expected to continue in Parliament in the coming weeks.
