By The Weekly Vision Reporter
The High Court sitting at Milimani has suspended the implementation of Section 44 of the Banking Act, granting commercial banks temporary relief from the requirement to obtain the Cabinet Secretary for the National Treasury’s approval before adjusting loan interest rates.
The conservatory order was issued by Justice Peter Mulwa on 13th August 2026 in Kenya Bankers Association vs Cabinet Secretary, National Treasury & Economic Planning, the Attorney General and 1 Other (Case No. HCCOMMPET/E007/2025). It comes as the Kenya Bankers Association (KBA) pursues an appeal against the same court’s earlier judgment of 11th December 2025, which had upheld Section 44 as consistent with Article 231(2) and (3) of the Constitution.
The KBA filed its Notice of Appeal on 18th December 2025, a week after the original judgment, before lodging a Notice of Motion on 28th January 2026 seeking the stay. In an affidavit sworn by its chief executive, Raymond Molenje, the association argued that its appeal raised arguable constitutional questions with reasonable prospects of success, and that without a conservatory order, banks would be forced to comply with a statutory provision whose constitutionality remained under challenge, potentially rendering a successful appeal academic.
Justice Mulwa applied the three-limb threshold for conservatory orders set out by the Supreme Court in Gatirau Peter Munya vs Dickson Mwenda Kithinji & 2 Others (2014), that the underlying appeal must be arguable, that its success would otherwise be rendered nugatory, and that granting the order serves the public interest.
On arguability, the judge found that the constitutional relationship between the Central Bank of Kenya’s oversight role under Article 231 and the Treasury Cabinet Secretary’s approval powers under Section 44 raised a genuine legal question deserving appellate scrutiny.
On prejudice, the court noted that Section 44 bars banks from adjusting loan rates without executive approval. Were no stay granted and the Court of Appeal later found the provision unconstitutional, the resulting disruption to the sector, and likely litigation over interest charged in the interim, would be difficult to remedy through damages alone.
On public interest, Justice Mulwa held that preserving the regulatory position that prevailed at trial would maintain financial-sector stability while the appeal is determined. He further noted that neither the Cabinet Secretary, the Attorney General, nor the second respondent filed any response opposing the application, leaving the KBA’s factual assertions uncontroverted.
The court accordingly stayed the implementation of Section 44 insofar as it restricts financial institutions from raising loan interest rates without prior Treasury approval, pending further orders of the Court of Appeal. Costs were ordered to be in the cause.
The ruling gives commercial banks temporary latitude to reprice loans without ministerial sign-off, a provision the industry has criticised as an intrusion into monetary policy territory more properly reserved for the Central Bank of Kenya. The reprieve is not permanent: it holds only until the Court of Appeal rules on the substantive constitutional question, and the National Treasury retains the option to seek review or defend the provision on appeal.
For borrowers and investors, the immediate practical effect is a return, at least for now, to a pre-Section 44 regime in which banks are freer to reprice loans in response to market conditions, a dynamic worth watching closely as the Central Bank’s monetary policy stance and the broader cost-of-credit debate continue to shape Kenya’s financial sector through 2026.
