Commercial banks which have increased charges or changed features of existing products without regulatory approval face penalties, the Central Bank has indicated in a circular to chief executives. CBK governor Patrick Njoroge says the regulator was investigating complaints from customers that some crafty banks have increased transactional charges in the wake of profit margins pressures after loan charges were capped at 14 per cent on September 20. Others have converted savings into current accounts to avoid paying the seven per cent minimum returns on term deposits. “Since the Banking (Amendment) Act 2016 came into force on September 14, 2016, the Central Bank of Kenya has received some applications from institutions seeking approvals to increase charges on their products,” Njoroge said in the Circular No. “CBK has also received a number of complaints from bank customers stating that their banks have imposed arbitrary charges or unilaterally converted their savings accounts into transactional accounts, and thereby losing the benefits that were accruing from those savings accounts.”Besides regulatory approval, the banks should explain to their clients the reasons for varying charges or terms and conditions in the existing contracts, the CBK says.

Source: The Star October 05, 2016 00:11 UTC