Youth Enterprise Development Fund (YEDF) has been given a go ahead to recover Sh176.5 million from Rafiki Microfinance Bank
Rafiki Microfinance Bank which was a part of the collapsed Chase Bank, has 21 days to honor the court order.
Rafiki is said to have breached the terms of contract by failing to issue the funds. Already, the Youth Fund board has notified Rafiki Microfinance Bank of possible forceful acquisition of its assets if it fails to pay the Sh176.5 million.
“Take further notice that we will commence liquidation proceedings against the bank unless the decretal sum is paid within the aforesaid statutory stipulated period without any reference to you,” read part of the notice.
Judge Francis Tuiyott of the Milimani Commercial Court, on October 5th, ruled that the bank had breached the contract terms agreed upon with its client, the Youth Enterprise Development Fund.
“It’s common ground that the bank is still in default and will have to suffer the penal interest ascribed in the contract,” judge Tuiyott ruled.
The board of the Youth Enterprise Fund had granted the bank Ksh100 million and tasked it to lend the money to qualifying youth in accordance with the credit guarantee scheme policies.
One of the terms stated was that the bank was to provide a guarantee equivalent to Ksh 100 million.
The bank enlisted was, however, put up under receivership by the Central Bank of Kenya (CBK) prompting the Youth Fund to demand that the bank provides another guarantee to the amount.
The youth fund alleges that the bank defaulted from this and hence was in breach of the contract terms.
It further accused the bank of issuing loans, on its behalf, to beneficiaries above the age prescribed in the policies.
After the judgement ruled by the Milimani Commercial Court, the counsel for the Youth Fund, Philemon Morara noted that the bank should comply with the court orders.
She echoed the judge’s orders that the amount should be refunded with accrued interest as well as legal costs incurred over the past 4 years.
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