Guaranty Trust Bank Kenya Fined Ksh33.2 Million for Misleading Loan Terms
The Competition Authority of Kenya (CAK) has fined Guaranty Trust Bank Kenya Limited (GT Bank) Ksh33.18 million after finding that the bank engaged in false and misleading representations and unconscionable conduct against ASL Limited. The regulator also directed GT Bank to reimburse the affected company for improperly imposed charges.
“The Competition Authority of Kenya has ordered Guaranty Trust Bank Kenya Limited to pay a penalty of Ksh33,180,000 for engaging in false and misleading representations and unconscionable conduct against its customer, ASL Limited, contrary to the Competition Act. Additionally, the Authority has ordered GT Bank Kenya Limited (GT Bank) to refund ASL Limited (ASL) KES 13,211,285, being the summation of the fees and charges determined as improperly levied,” the CAK statement read.
The enforcement action followed a formal complaint filed by ASL in October 2024 over the management and renewal of its credit facilities.
“The investigation into GT Bank’s conduct was occasioned by a complaint lodged with the Authority by ASL on 5th October 2024, alleging unfair treatment in the management of and renewal of its credit facilities held with the bank,” the statement added.
ASL had maintained a banking relationship with GT Bank for over two decades. In July 2021, the company secured multiple credit facilities, including overdrafts, letters of credit, guarantees, asset financing, and working capital support, all secured against company assets and personal guarantees.
“ASL had maintained a banking relationship with GT Bank since 2001. In July 2021, ASL secured credit facilities including overdrafts, letters of credit, guarantees, asset financing, and working capital support. The facilities were secured against the company’s assets and personal guarantees by the directors of ASL,” CAK noted.
The credit facilities were initially set to expire in May 2022, with renewal subject to review. In June 2023, GT Bank proposed a short-term extension while finalizing the renewal process. ASL accepted additional security requirements, including reducing one trading line from USD 5.5 million to USD 3.5 million.
“In June 2023, GT Bank offered a three-month extension on the facility for the process to be finalized. ASL was required to provide additional security among other demands which it accepted. ASL also accepted other revised requirements including reducing one trading line from USD 5.5 million to USD 3.5 million and retaining a cleared collateral,” the statement read.
However, the bank later issued a new offer letter further reducing the facility limits by USD 3 million. ASL, finding the terms unacceptable, opted to transfer its facilities to I&M Bank.
“However, a month later, the bank issued a new offer letter, further reducing the limits by USD 3 Million. ASL requested for time to deliberate internally. Upon concluding that the facility amounts and terms on offer were not agreeable, ASL notified GT of intention to transfer its facilities to I&M Bank,” CAK reported.
CAK concluded that GT Bank’s actions violated consumer protection provisions of the Competition Act. Consequently, the authority imposed both financial penalties and compliance directives.
“Premised on the above findings, the Authority ordered Guaranty Trust Bank Kenya Limited to pay a pecuniary penalty of KES 33,180,000.00, being 2% of its Gross Annual Turnover for the year 2023; refund ASL Limited KES 13,211,285 within 30 days, the fees and charges that were levied in the account; to comply with the provisions of the Act and the Competition (General) Rules, 2019; and to sensitize its staff on the provisions of the Act, specifically Part VI, and the Competition (General) Rules 2019,” the statement concluded.
This ruling highlights the growing regulatory scrutiny on financial institutions and sets a precedent for fair treatment of corporate clients.
Elsewhere, this comes weeks after the Office of the Data Protection Commissioner (ODPC) confirmed that biometric data collected from Kenyans by Tools For Humanity had been fully deleted.
“Regarding the processing of Kenyans’ personal data by Tools For Humanity, we confirm that the Data Controller has deleted all biometric data previously collected from Kenyan citizens. The Office remains dedicated to enforcing the law, protecting data subjects, and ensuring that all data controllers and processors are held accountable for any non-compliance,” ODPC stated.]
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Guaranty Trust Bank Kenya Fined Ksh33.2 Million for Misleading Loan Terms
