By William Muchiri
Worth Noting:
- The Kuria Kimani led committee heard that delay in the approval of the deal had resulted in the bank losing over Sh100 Million per month reduced the bank’s assets and increased the levels of Non-Perfoming Loans (NPLs).
- These, he observed, had further resulted into insufficient capital and lack of liquidity buffers for resilience, coupled with a high turnover of senior management.
- The committee also met with the leadership of Sacco Societies Regulatory Authority (SASRA) led by Mr. Peter Njuguna, The Chief Executive Officer, Mr. Jeremiah Were, Manager , SACCO Supervision and Mr. Peter Owira, Director, Compliance, Market Conduct & Regional Coordination to shade more light over the same issue.
The Central Bank of Kenya (CBK) through its Governor Dr. Patrick Njoroge has given the proposal on the acquisition of Spire Bank a clean bill of health.
Speaking yesterday when he appeared before the Departmental Committee on Finance and National Planning in the National Assembly, Governor Njoroge noted that the CBK has endorsed the deal in the interest of saving the members’ deposits and to safeguard the interests of the bank’s manpower.
He explained that should the acquisition have happened a few months ago, they would have saved Mwalimu Sacco more than 300M.
The Governor lamented that due to accumulated losses posted over the years, the bank’s core capital has been eroded from a high of Sh1.57 billion in 2016 to a negative of Sh1 billion.
He warned against maintaining the status quo on Spire Bank adding that the CBK continues to urge for a quick conclusion of the acquisition process.
The Kuria Kimani led committee heard that delay in the approval of the deal had resulted in the bank losing over Sh100 Million per month reduced the bank’s assets and increased the levels of Non-Perfoming Loans (NPLs).
These, he observed, had further resulted into insufficient capital and lack of liquidity buffers for resilience, coupled with a high turnover of senior management.
The committee also met with the leadership of Sacco Societies Regulatory Authority (SASRA) led by Mr. Peter Njuguna, The Chief Executive Officer, Mr. Jeremiah Were, Manager , SACCO Supervision and Mr. Peter Owira, Director, Compliance, Market Conduct & Regional Coordination to shade more light over the same issue.
At the same time, Governor Njoroge told the Committee that the CBK is working towards the improvement of the credit standing of mobile phone digital loan borrowers whose loans are non-performing and have already been reported to credit reference bureaus (CRBs).
He noted the bank had adopted this strategy as means to improve the Credit Repair framework.
According to statistics by the CBK, over 4.2 Million mobile phone digital borrowers who have been listed with CRBs are in need of a repair of their credit standing.
He told the committee that the status of the borrowers will be updated from non-performing loans through a provision of 50 percent discount of the outstanding loan amount, with a six month maximum period to repay the balance.
The committee also met with the Association of Microfinance and Digital Lenders Association regarding the Credit Repair Framework.
In their submissions, they requested to be incorporated in the credit repair framework to ensure they come up with a policy that will ensure a win-win position.