National Bank sued over Sh700m interest overcharge
Tulla Reserve Supplies Limited has moved to court seeking a refund of over Sh700 million overcharged by National Bank of Kenya (NBK) as interest of a loan it took in 2014.
The company claims that NBK illegally deducted Sh737,384,969 from its account within a period of one year when it had fully repaid the loan of Sh145 million including the initial agreed interest of Sh14.9 million.
According to court documents the company argues that it was illegal, and beats logic for a bank to demand the exorbitant interest within a period of one year when the agreed amount had been settled.
The company is now demanding Sh3.7 billion compensation for damages and another Sh8 million allegedly extorted from them by the bank’s head of Islamic Banking Musa Adan to procure the services.
The company further wants a declaration that NBK has breached its duties and order stopping it from further deducting more money from its escrow account. They also want a refund of all money illegally deducted from the account. The bank has already deducted Sh737 million from the escrow account and still demanding Sh228 million. I do not understand how a loan of Sh145 million can accrue a total of Sh922 million within a period of one year and five months. It is amazing and like rocket size to me,” argues Diba Hussein Dado.
The company says that they approached the bank on October 2014 for a loan facility of Sh350 million to expand its business operations of supplying goods to Unga Holdings Ltd, Kenya Prisons and World Food Programme where NBK agreed to advance them a loan of Sh245 million to repaid within a period of one year. However, in December 2014, the bank released Sh145 million to the company’s account as opposed to the agreed loan amount
Dado has also accused the bank’s head of Islamic Banking of misrepresenting facts to dupe them into signing the loan agreement on the believe that it was in accordance with Islamic Banking laws and wants the court to declare that
“The arbitrary increase of interest is inconsistent with those regulations and has exposed the company to massive losses,” said Dado.
Justice Francis Tuiyot directed that all parties in the suit file their submissions before the hearing on October 4.
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