Following the announcement of Central Bank of Kenya’s Credit Repair Framework a few weeks ago, NCBA Group says it will waive at least Ksh.5.5 billion in defaulted Fuliza and M–Shwari loans.
NCBA has carved out Ksh.11 billion in defaulted Fuliza and M-Shwari loans, a move that will see at least half of the balances or Ksh.5.5 billion waived off.
The Kenyan banking industry is expected to write off Ksh.15 billion in bad loans with the total value of loans under consideration for the credit repair program standing at Ksh.30 billion.
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During the announcement, NCBA Group Director, Digital Business Eric Muturi, said, “We are looking as far back as ten years. Most digital lenders have only existed probably in the past three years or so. We were the first to do mobile-centric digital lending. Our stock of loans when you look at our history tends to be the largest”.
NCBA estimates that approximately 5 million loan customers with defaulted Fuliza and M-Shwari loans will benefit from this move.
“Five million customers is a very big number representing about 10 per cent of Kenyans who have used our digital loan products at least once,” said NCBA Group Managing Director John Gachora.
The lender also noted that it is likely to consider waivers greater than 50% for customers who repay the defaulted loans within a short span.
Central Bank of Kenya Credit Repair Framework
On November 14, the CBK unveiled the credit repair program which will see an estimated 4.2 million Kenyans’ bad loans regularized after which the customers will be positively listed with Credit Reference Bureaus (CRBs).
The credit repair program will run for six months and is set to expire in May 31, 2023. During this period, financial institutions will give a 50% discount on outstanding digital loans then the benefiting borrowers must then clear the remaining loan ( other 50%) by May 31, 2023.
“The framework seeks to improve the credit standing of mobile phone digital borrowers whose loans are non-performing and have been reported as such to Credit Reference Bureaus (CRBs),” noted the Central Bank Of Kenya.
NCBA is the market leader in digital lending with disbursements of Ksh.521 billion in nine months to September. The loans cover Ksh.461 billion in Fuliza disbursements and Ksh.60 billion under M-Shwari.
