Following a surge in reports of Kenyans losing their cars to auctioneers and financial institutions due to loan defaults, Nyeri Senator Wahome Wamatinga on Wednesday, April 26, tabled a motion to amend the country's banking laws.
In his motion, Wamatinga lamented that currently, car owners are not protected from the Banking Act, which allows financial institutions to auction them.
Wamatinga, therefore, implored the National Treasury, led by Cabinet Secretary Njuguna Ndung'u, to review the law and allow debtors to renegotiate their loan repayment agreements.
"The Senate urges the National Treasury and Economic Planning to come up with a policy framework to review the Banking Act in order to renegotiate the repayment terms of the loans and provide cushion for Kenyans with non-performing loans and prevent the loss of their movable assets," Wamatinga stated.
Defending his motion, the lawmaker observed that most car owners had obtained credit for their automobiles.
He, however, noted that some of the debtors defaulted on the payments due to economic downtime which mostly affected the online hailing taxi business.
"Due to the high unemployment rate in Kenya, many Kenyans are seeking loans from saccos, microfinance institutions and banks to start Small and Medium Enterprises (SMEs) to sustain their livelihoods," his motion read in part.
The Banking Act gives financial institutions powers to hold onto property until a debtor clears the pending credit.
The Act further allows financial institutions powers to auction property to recover the money should the debtors fail to clear the debts.
"Securing a debt on land and, in the event of default in payment of the debt, holding the land for so long as, in the opinion of the Central Bank, is needed for the realisation of the debt," the Bank Act stipulates in regards to land.
In one instance, one motorist lost his car while driving along Mombasa Road after a financial institution reigned in.
However, depending on the loan type, others are allowed to restructure the repayment terms to avoid losing property.
