How much interest and penalties a lender can add once you default (the in duplum rule)
Banking Act s.44A; Central Bank of Kenya Regulations, 2022; Central Bank of Kenya · sources read 5 Oct 2026
Once a loan becomes non-performing, a bank or licensed digital lender can recover at most the principal owed at that point, plus contractual interest that does not exceed that principal, plus recovery expenses. In practice the interest added after default cannot be more than the principal you owed when you defaulted.
- Where
- Your lender first; then the Central Bank of Kenya; or the courts
Steps
- Ask the lender in writing for a statement and complain if the amount claimed goes beyond the limit.
- A digital lender must resolve your complaint within 30 days.
- If a bank's answer doesn't satisfy you, write to the Central Bank of Kenya with the details and the bank's reply.
Watch out
- The limit does not cover interest a court orders after it gives judgment.
- If you resume paying and then default again, the limit is counted from the last time the loan went bad.
- The old interest rate cap (section 33B of the Banking Act) was repealed in 2019. This rule only limits what can pile up after default.
Who this covers
- Borrowers from banks, financial institutions and mortgage finance companies.
- Borrowers from licensed digital credit providers (loan apps).
- Guarantors who owe a bank because of a loan they guaranteed.
Official sources (3)
- The Central Bank of Kenya (Digital Credit Providers) Regulations, 2022 (L.N. 46 of 2022) centralbank.go.ke · read 2 Oct 2026
- Banking Act (Cap. 488) new.kenyalaw.org · read 5 Oct 2026
- Resolution of customer complaints in the banking sector centralbank.go.ke · read 2 Oct 2026