Pain for Kenyans as banks go after loan defaulters

Pain for Kenyans as banks go after loan defaulters

•Cars are among the most hit assets with others being industrial and household equipment.

•The number of borrowers defaulting on loan repayment has reached a new decade high of 15 per cent. Vehicles for auction at the Leakey’s auctioneers yard in Nairobi/FILE Thousands of households and individuals are at pains as banks move to recover assets from loan defaulters, amidst the Covid-19 pandemic that has hard hit the economy.

This, as Kenyan banks’ credit profiles continue to face significant risk from the economic impact of the pandemic, with the the sector’s non-performing loans (NPL) ratio set to rise to a historic high past the 15 per cent projected for last year.

Most hit assets are cars with others being industrial and household equipment where owners are facing the auctioneers’ hummer.

Home owners are also on the receiving end as banks close in on mortgage defaulters, as default rate soar in the wake of Covid.

It is expected to worsen than 2019, when default on mortgages jumped 41 per cent to Sh38 billion, occasioned by salary cuts and job losses witnessed last year.

In 2019, unpaid mortgages increased by Sh11.2 billion , a rise that outpaced other segments like manufacturing (19 per cent), traders (4 per cent) and personal loans (six per cent) in growth of default on loans.

Buyers of cars through bank financing, whom are yet to clear payments, are among the most affected this year, in a trend that started last year, with auction advertisements being a norm in the dailies.

For instance today, Startruck Auctioneers is auctioning 221 units in Nairobi, Mombasa, Kitale and Eldoret, in a mix of personal and commercial vehicles.

Most are units registered between 2019 and last year, when Covid ravaged the economy leading to closure of businesses and loss of millions of jobs across different sectors.

“..duly instructed by our principals, the financiers we shall sell the repossessed motor vehicles by public auction on Friday 8, January 2021,” the firm says in a public notice, “sale is subject to a reasonable reserve prices.”Stanbic Bank and NCBA Group recently recovered 72 cars and 51 cars, respectively, which were sent for the hammer, as the lenders moved to recover the units from loan defaulters.Taxi drivers operating on ride-hailing apps such as Uber, Bolt, and Little are among those most affected.In 2018, Stanbic Bank entered a partnership with Uber and CMC Motors to offer drivers with Sh835,000 low-cost vehicles at 14 per cent interest, […]

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