Strive to curb ballooning loan defaults

Life is no longer easy economically, even for those who have been enjoying it. This came into mind following reports that banks plan to step up asset seizures as part of a strategy to recover overdue loans.

According to the Parliamentary Budget Office (PBO), lenders have indicated their intention of attaching borrowers’ collateral as part of an intensified credit recovery drive. Therefore, in case of a secured debt such as a home or a car loan, the bank can take over the asset that is used as collateral to secure borrowing and sell it off to recover their money.

Indeed, Central Bank of Kenya data show the banking sector’s gross non-performing loans (NPLs) rose by 25.67 per cent to Sh635.8 billion last November from Sh505.9 billion in the same period the previous year.

But rather than punish borrowers, bankers should note that PBO attributed the increase of NPLs to the high cost of borrowing. That was a result of the CBK increasing its policy rate and a weak business environment.

To remedy the situation, Kenya Bankers Association’s call for a stop to further rate hikes to help to stem further ballooning of loan defaults should be supported by all.

George Kimani Njuguna, Kiambu

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The need for financial literacy among the youth has never been more pressing than in today’s complex economy. With decisions like student loans, credit cards and budgeting looming, understanding money matters is essential for long-term success.

Financial literacy empowers young adults to make informed choices, avoid debt traps and plan for their future. Equipping them with the knowledge and skills to manage their finances effectively will pave the way for a generation of finance-savvy individuals poised for success.

Knowkins Charles Odiwuor, Kisumu