NCBA Bank Kenya customers in loan arrears will have their repayments collected from accounts other than the designated primary repayment account if it has a deficit amount on the due date following the introduction of a new linking feature by the lender.
The auto-sweep feature, which does not require any action from the account holder, signals the bank’s commitment to curb defaults and late payments in the event that borrowers do not have sufficient funds for an automatic debit in their repayment accounts.
This step gives the bank a comprehensive overview of customers’ credit obligations and cash balances across multiple accounts within the institution.
“We are introducing Auto Sweep, a feature that ensures smooth loan repayments. If your primary loan repayment account does not have sufficient funds on the due date, the bank will automatically deduct the amount due from your other accounts under the same customer number,” the lender said in a text message to customers.
“This way you avoid reminder fees and simplify credit management. Nothing else is required from your side.”
However, fixed deposits and junior savings accounts are excluded from the auto-sweep feature, which targets savings accounts and current accounts with lower withdrawal restrictions.
The Bank explained that this feature was introduced as part of its set-off powers under the terms of the loan agreement.
If a borrower has multiple loans, the system prioritizes the loans by maturity date and loan type and makes the first disbursement to the loan with the earliest maturity date.
Borrowers cannot opt out of the Automatic Late Payment feature because the lender states that enabling this option would increase the risk of default and associated penalties. If there are insufficient funds in all accounts, the repayment will remain unpaid and late fees or penalties will be charged.
Customers will receive an SMS notification after an auto-sweep transaction is initiated.
