Higher Education Loans Board CEO Charles Ringera. PHOTO | ROBERT NGUGI
By OUMA WANZALA, owanzala@ke.nationmedia.com
In Summary
- CEO Charles Ringera says move will cover organisation against risk of defaults by students who have received loans.
- According to Helb data, about 70,000 past beneficiaries of the loans are holding up to Sh11 billion while the whereabouts of about 25,000 other borrowers are unknown.
The Higher Education Loans Board (Helb) has turned to
insurance firms for a product to cushion itself against defaults as
the stock of bad debts in its books hits Sh11 billion.
Chief executive officer Charles Ringera said the insurance
policy sought would henceforth cover the prganisation against the risk
of defaults by every undergraduate advanced loans.
The board currently extends loans to students from
poor backgrounds for an annual interest rate of four per cent on
assumption that they can secure jobs one year after graduation to begin
repayment.
“For the postgraduate students, we can recover the
loans in case of death from the insurance but for undergraduates it is
hard. That is why we are working on an insurance policy for
undergraduates so that we can still recover our money in case of
unfortunate incidents,” said Mr Ringera.
According to Helb data, about 70,000 past
beneficiaries of the loans are holding up to Sh11 billion while the
whereabouts of about 25,000 other borrowers are unknown.
An outstanding balance of Sh2.5 billion is being
held by diaspora beneficiaries. Helb expects its stock of bad loans to
grow sharply following Al-Shabaab’s terrorist attack on Garissa
University College last year, which killed 147 students, most of them
on government sponsorship.
On Thursday, the board signed a partnership with
Credit Info CRB Kenya Limited as it moves to incorporate debt profiles
of postgraduate students in its loan assessment tool.
Credit Info joins Metropoli and Trans Union, which have been doing credit reference services for Helb since 2013.
Postgraduate students seeking Helb loans will only
qualify if they have the right credit scores. Credit Info chief
executive Daniel Kanyi said the initiative will help in tracking down
defaulters at all level.
“The exercise will improve access to credit and
promote responsible lending through the application of effective risk
management practices,” said Mr Kanyi.
Mr Ringera also announced that Helb had stepped up
the inspection of corporate entities to ensure that staff that benefited
from its loans repay them.
He also disclosed that retiring staff would be
compelled to produce a clearance certificate from Helb before they get
their benefits.
“We are very serious about this; we will fine any
corporate which fails to submit employee repayments Sh3,000 per month
and Sh5,000 per employee,” said Mr Ringera.
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