StanChart Blocks Borrowers With Multiple Mobile Loans

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StanChart Blocks Borrowers With Multiple Mobile Loans


ngari

Kariuki Ngari, Executive Director of Standard Chartered Bank Kenya. PHOTO | NMH

Standard Chartered Bank Kenya # ticker: SCBK will block borrowers with multiple digital loans from its mobile lending app, which will be unveiled in the coming days.

StanChart chief executive Kariuki Ngari said the lender would not “overburden” borrowers with additional loans, citing increased default rates in the mobile microlending segment.

“One of our basic rules in lending is that we will always be a responsible lender and we will not just go there (the digital mobile lending segment) and just start lending,” Mr. Ngari said in an interview.

“For example, we will not give a loan if someone takes the sixth loan to pay off the first or fourth. We will be very careful with this. “

StanChart has been approved by the Central Bank of Kenya (CBK) to engage in digital microlending.

The lender, controlled by the UK’s Standard Chartered Group, will join its top tier companies such as KCB (KCB-M-Pesa), Equity (Equitel), NCBA (M-Shwari), Co-op (M-Co-op). Cash) and Absa Kenya (Timiza) when he provides an instant loan for a small amount.

Banks have mainly used microlending applications, popular with small traders and individuals with irregular income streams, to reach the mass market with convenience and relatively lower costs compared to conventional expansion.

StanChart, however, insists it was not going to shift its focus away from middle- and high-income clients through mobile lending.

“We know where our strength is, this is an area that we understand, and our clients are connecting with us. This is an area that we will continue to double down to stay relevant, ”said Mr Ngari.

“No one leaves the place where he is strong, and does not try to investigate, because after that you may find that you are not standing at all.”

CBK rules limit the maximum transaction amount via mobile phones at 150,000 shillings, while daily transactions and account balances are capped at 300,000 shillings, which limits mobile applications to microlending services.

Digital lenders mainly use machine learning technologies that allow them to access data stored on smartphones, such as the repayment history of other mobile loans, to determine the creditworthiness of a borrower.

“There is a lot of history. The regulator is now shifting to control this sector (digital mobile lending), which suggests that something is wrong, ”said Mr Ngari.

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