More banks issuing ultimatum to loan defaulting clients

12Sep 2019
Francis Kajubi
Dar es Salaam
The Guardian
More banks issuing ultimatum to loan defaulting clients

MORE banks are issuing ultimatums to defaulting borrowers who include retrenched bankers who have disappeared in the market.

DCB Bank Plc’s Chief Finance Manager, Zacharia Kapama speaks at a past event File photo.

DCB Bank Plc’s Chief Finance Manager, Zacharia Kapama said in Dar es Salaam this week that they have issued a 14 day notice to loan defaulters to present themselves before the bank or risk legal action.

“If they show up then we will negotiate with them on a possible repayment schedule but if they don’t them we will proceed with legal action,” Kapama said noting that DCB’s non-performing loans currently stand at 17 percent worth 15.8bn/- , a slight improvement from 19 percent at the end of March this year.

“We expect to recover not less than 1bn/- from this operation although the total amount that is in the hands of borrowers is more,” he added. The Dar es Salaam based lender which is listed at Dar es Salaam Stock Exchange recovered from 6.9bn/- loss in 2017 to post a 1.9bn/- gross profit last year.

“Efficiency in our operations and digitization contributed to a decrease in operational costs to 16.9bn/- last year from 21.2bn/- registered in 2017. Serious collection of debts associated with non-performing loans led to a decrease in provision to bad loans that is to be deposited to the central bank reaching 263million/- from 4.5bn/- remitted in 2017” he said.

Last month, TPB Bank Plc also gave defaulters of its loans a 14 days ultimatum and said it targets to recover more than 1bn/- from the defaulters.

The bank’s CEO, Sabasaba Moshingi said the borrowers have not serviced their loans in the past six months.

“I cannot reveal the exact amount and the number of customers that have defaulted because you will end up making a comparison of what we expect to recover from what is defaulted which might pose questions to the public” Moshingi said noting that the majority of the defaulters were clients of Twiga Bancorp and Tanzania Women’s Bank.

In May last year, Bank of Tanzania approved the annexing of Twiga Bancorp and TWB with TPB to save the duo from collapse blamed on bad loans.

In its fresh Quarterly Economic Bulletin, the central bank stated that total domestic credit by the banking industry which comprise credit extended to the government and private sector, grew by 17.3 per cent in the year ending June 2019 compared with 1.5 per cent in the year ended June 2018.

According to BoT statistics, average NPLs is 10 percent this year which was down from 12 percent in the previous year while the target is 5 percent threshold of the central bank.