Small Banks Not Lending Anymore

Entrepreneurs are raising concerns over the skepticism of small banks in lending funds to their customers.

Small banks have been on the forefront for coming to the aid of Small Medium Enterprises buy giving them the much needed cash to establish themselves.

The banks now appear to be scared of lending to their own customers for fear on the growing  of non-performing loans.

Some financial institutions in the country have made loses due to non-performing loans where those who take loans fail to pay back on time.

The banks are also taking this a precautionary measure to prevent them from going into receivership as a result of inadequate finances as it was the case with Chase Bank.

Small businesses are likely to be hurt because most of them get their funding from loans in these small banks.

According to the businessman and entrepreneur, Steve Biko Wafula, during one of his online interactions, the move by small banks to make it hard for entrepreneurs to get loans from them is likely to push them away to financial institutions and that will hurt the banks themselves.

Read: What is the Truth behind Non-Performing Loans: Employees or Customers?

He says that banks making losses is more of a management issue than a loan disbursement is issue.

The small banks have however have remained mute on the issue and what is going around are just speculations.

In less than two years, three banks have been placed under receivership with two of them, Dubai Bank and Chase Bank having come back to the market.

Chase Bank wrote history for being under receivership for only three weeks and coming back after being bailed out by Kenya Commercial Bank.