Friday, October 15, 2010

INTEREST RATE COMPUTATION ERRORS

Are you servicing a mortgage, loan or overdraft and may have issues with the way interest rates and other charges are computed? Well, there is an organisation in Kenya named 'Interest Rates Advisory Centre' http://www.irac.co.ke that helps you audit your bank statements, and also helps you seek refunds from the bank where miscalculations  have occurred. I totally agree with them when they state that first hardly anybody queries their bank statement although the banks actually invites you to point out errors within 14 days and secondly most people don't have capacity to pick out even obvious errors. I do not know how effective they are but they do raise important issues. When you recieve your next statement its worth giving it a deeper look.

Monday, October 4, 2010

CIVIL JAIL FOR DEFAULTERS UNCONSTITUTIONAL

By SAM KIPLAGAT, skiplagat@ke.nationmedia.com
Posted Wednesday, September 29 2010 at 20:31

If you are planning to commit a debtor to civil jail as form of punishment for defaulting on payment, think again — it is unconstitutional.

In a ruling that is likely to deal a blow to money lenders, a judge ordered the release of a woman who had been committed to civil jail in Murang’a, saying it was against the UN International Covenant on Civil and Political Rights (ICCPR).

According to Lady Justice Martha Koome, international treaties and conventions that have been ratified by Kenya are imported as sources of the Kenyan Law by section 2(6) of the Constitution.

“An order of imprisonment in civil jail is meant to punish, humiliate and subject the debtor to shame and indignity due to failure to pay a civil debt. That goes against the ICCPR that guarantees parties basic freedoms of movement and of pursuing economic, social and cultural development,” said the judge.

Shame and indignity

Justice Koome made the ruling in an application filed by retired civil servant, Ms Zipporah Wambui Mathara, 58. The mother of four had been committed to civil jail for 30 days for failing to pay a debt of Sh339,855 to Mr David Ndungo Maina.

When a person is committed to civil jail, the lender pays Sh60 every day to the prison authorities for subsistence until the debtor is released or settles the debt. This form of punishment has been used by banks and other lenders to punish defaulters.

But Justice Koome said in the ruling that there were other methods of recovering the debt such as attaching the debtor’s property.

Court papers show that Ms Mathara had borrowed Sh42,000 from Mr Maina in December 2008. In an affidavit filed before a Murang’a court, her husband George Mathara says that they became aware of the court proceedings after she was arrested.