NAIROBI, Kenya, Jun 26 – The National Assembly has began debating a draft legislation that seeks to ensure banks and other financial institutions recover assets of principal borrowers before proceeding to cease the assets of a persons who guarantee the loans.
Speaking while introducing the contents of the Law of Contract Amendment Bill, Leader of the Majority in the National Assembly Aden Duale on Wednesday said the amendment will ensure banks undertake due diligence on borrowers in case of default.
“The borrower is the one who benefits from a loan and so it is only in a case where the assets of the borrower have been exhausted and the loan has not been recovered in full that the bank can go to the guarantor,” he said.
Minority Whip Junet Mohammed and Tharaka MP Gitonga Murugara said the amendment will shield will innocent guarantors from needlessly losing their personal property.
Minority Deputy Whip Robert Mbui cautioned the House to proceed with caution on the matter as the move my attract a backlash from the lending institutions even as Deputy Speaker Moses Cheboi and Minority Deputy Chief Chris Wamalwa said MPs had been earmarked as credit risk due to their fixed five-year political terms.
