In a recent ruling, the regulator ordered the bank to pay around $257,000 (roughly KES 33.18 million) and also to refund ASL about $102,000 (approximately KES 13,211,285) in fees that were improperly charged.
ASL, a diversified company supplying goods to the construction, electrical, and industrial sectors in Kenya, lodged a formal complaint against GT Bank in October 2024. They claimed that the bank mishandled the renewal of their credit facility.
The relationship between ASL and the bank dates back to 2001, during which they’ve had multiple credit facilities like overdrafts, letters of credit, and guarantees, secured by both company assets and personal guarantees from directors.
The agency’s investigation revealed that issues arose when ASL attempted to renew its facility in early 2022. Even though they initiated the renewal process on time, they stated that GT Bank delayed action and frequently altered terms, such as asking for more security and lowering credit limits significantly.
Regulator: Bank misled and pressured customers
The regulator concluded that the bank misrepresented ASL’s facility status by charging for services that weren’t approved and applying default interest retroactively without prior notice.
Furthermore, lenders were accused of framing substantial changes as routine updates, which could mislead customers about the consistency of the services offered.
These actions were deemed violations of competition law, particularly regarding false or misleading representations.
Additionally, the regulator found that the bank acted unreasonably by exploiting its strong bargaining position. This included imposing unnecessary conditions and pressuring ASL, especially when ASL expressed interest in moving its business to I&M Bank.
Retroactive interest causes protests
One of the most contentious points was the $102,000 in default interest that ASL argued was unfairly backdated to August 2023, months before any default was noted. The bank offered a refund of $21,705 as a “good faith” gesture, but ASL declined it, insisting on a complete refund instead.
The agency calculated the fine by considering both mitigating and aggravating factors. While competition law permits fines of up to 10% of a company’s annual turnover, GT Bank’s fine, which was set at 2% of its total turnover for 2023, was viewed as proportional to the misconduct’s severity and impact.
Beyond the fines and refunds, authorities mandated that lenders adhere to all competition law provisions and provide training to staff—especially those managing credit facilities—on fair business practices and regulatory standards.
This judgment highlights an increasing scrutiny in Kenya over financial sector behavior and indicates a tougher approach towards lenders who exploit information gaps or enforce harsh conditions without transparency.
For ASL, this ruling affirms what they have often described as an unclear and shifting situation that has hindered their operational capabilities.
