Once a loan repayable by fixed instalments has been fully paid, the bank has no right to keep taking money from your account. If it does, it must refund those extra deductions, and the refund usually carries simple interest at 12%.
Why the bank must refund
A fixed-instalment loan means you agreed to pay the same amount at set intervals until the debt is cleared. The deductions are allowed because of that agreement. When the last instalment is paid, the agreement has done its work and there is nothing left to deduct for.
Any money taken after that point is money the bank holds without right. In everyday terms, it belongs to you and the bank owes it back. The High Court has held that deductions taken after full repayment must be refunded.
What about interest?
Courts generally order interest on such refunds. The usual court rate is 12% per annum, and it is simple interest. That means it is worked out only on the amount wrongly taken and does not pile up on earlier interest.
Two points to keep in mind:
- The 12% is the customary court rate, not an automatic penalty written into law.
- Awarding interest is at the court’s discretion (see section 26 of the Civil Procedure Act).
What this looks like in real life
A bank will not normally hand back money on the spot. In practice, a refund usually follows a complaint, a reconciliation of your account, or a court order.
If you think deductions are continuing after your loan is cleared, some sensible steps are:
- Check your statements and note the date of your final instalment.
- Add up every deduction made after that date.
- Keep copies of your loan agreement, statements and any receipts or messages from the bank.
- Complain to the bank in writing and ask for a written reply.
- Speak to an advocate if the bank does not sort it out.
Checking your statements regularly is a simple habit. A deduction that continues month after month can quietly add up before anyone notices.
This rule comes from a High Court decision, so how it applies will depend on the facts of each loan. Your own loan terms and account records are what count.
📚 Equity Bank (Kenya) Limited v Tinega [2026] KEHC 16312 (KLR)
Entertainment and general information, not legal advice. For advice on your own situation, speak to an advocate.