Nairobi, Aug. 18 -- The High Court has temporarily suspended Section 44 of the Banking Act, which requires financial institutions to obtain approval from the Treasury Cabinet Secretary before increasing loan interest rates.

The court granted the Kenya Bankers Association (KBA) a stay pending an appeal, saying failure to do so could cause significant and lasting disruption to the banking industry if the appellate court later finds the provision unconstitutional.

The judge said such a decision could also trigger widespread litigation over interest rates charged in the past.

"These issues and losses cannot be easily fixed with damages, making the appeal mostly futile," the court said.

KBA challenged Section 44, arguing that interest-rate...