NCBA Bank Kenya customers with loan arrears will have repayments recovered from separate accounts other than the designated primary repayment account if the latter holds a deficient balance on the due date after the lender unveiled a new inter-linking feature.
The auto sweep feature, which does not require any action from the account holder, signals a drive by the bank to curb defaults and late payments in the event where borrowers lack sufficient funds for automatic deduction in their repayment accounts.
The move will give the bank a comprehensive view of customers’ loan obligations and cash balances in multiple accounts within the institution.
“We are introducing auto sweep, a feature that will ensure seamless loan repayments. If your primary loan repayment account lacks sufficient funds on the due date, the bank will automatically collect the amount due from your other accounts under the same customer number,” the lender said in a text message to customers.
“This helps you avoid late repayment fees and simplifies loan management. No action is needed on your part.”
Fixed deposit and junior savings accounts will, however, be exempted from the auto sweep feature, which targets savings and current accounts that have less withdrawal restrictions.
The bank said the feature has been launched in exercise of its right of set-off as embedded in the loan contract arrangement terms and conditions.
If a borrower has multiple loans, the system will prioritise loans based on the due date and loan type, effecting the first settlement to the loan with the earliest due date.
Borrowers will be unable to opt out of the auto sweep feature as the lender says activating this option would increase the risk of missed payments and associated penalties, adding that if there are insufficient funds across all held accounts, the repayment will remain unsettled and will incur late payment fees or penalties.
Customers will receive a notification via SMS after an auto sweep transaction is initiated.
