The High Court has temporarily allowed banks and other financial institutions to increase loan interest rates without first seeking approval from the National Treasury.

🇰🇪 Breaking It Down

In a decision issued on Thursday, August 13, the court suspended a provision under Section 44 of the Banking Act that requires lenders to obtain approval from the Treasury Cabinet Secretary before raising interest rates.

Through a conservatory order, the court stayed the implementation and operation of the provision restricting financial institutions from increasing loan rates without prior approval.

The order followed a challenge by the Kenya Bankers Association (KBA), which opposed the approval requirement.

📌 What You Need to Know

The ruling now indicates that, pending determination of the case, bankers will have the liberty to increase loan interest rates without approval of the Treasury.

The order will remain in force pending further directions from the Court of Appeal, where KBA is challenging an earlier High Court judgment delivered on December 11, 2025.

The December 2025 judgment had declined to declare Section 44 unconstitutional despite arguments by the bankers' association that the provision interfered with the constitutional independence of the Central Bank of Kenya (CBK).

According to CBK, commercial banks do not require the National Treasury's approval to adjust lending rates following changes in the country's monetary policy.

Speaking during the East Africa Banking School Conference (EABSC) 2026 on Tuesday, July 14, CBK Governor Kamau Thugge said the central bank's position is that monetary policy decisions are independent and should be implemented by banks without seeking the approval of the Cabinet Secretary for the National Treasury.

"From the Central Bank's point of view, the decisions from the courts have been that monetary policy is independent. Therefore, when we change the interest rate, that should translate immediately to lending rates. We don't have to go through the minister," Thugge said.

📰 Source: Kenyans.co.ke