Standard Chartered Bank branch on Kenyatta Avenue. FILE PHOTO | NMG
Standard Chartered Bank Kenya is closing accounts of small businesses that fail to hit a monthly cash inflow of Sh10 million, a move the institution said has mostly affected inactive clients.
The move has seen affected small and medium-sized enterprises (SMEs) seek banking services at other lenders.
StanChart has this year shut an undisclosed number of SME business accounts, in what some of the businesses that spoke to the Business Daily said was the failure to have cash flows to the tune of Sh10 million through their accounts monthly.
“I had banked with the bank for more than 15 years where I operated the business and my personal accounts but this year, I was told that the bank would close it since the cash flows were below its limit,” a trader whose business account was closed this month said.
The trader said the bank started the process early this year. But the bank says it has reviewed its portfolio “to identify inactive accounts” in line with its risk and governance protocols, thus the move.
While StanChart has not disclosed the number of businesses affected, it said the exercise applied to a “a small segment of customers.”
A letter from the bank’s head of business banking in the country said the lender was closing accounts based on their “utilisation”.
“A number of the affected accounts are inactive which causes a risk to our clients and the bank,” said the Head of Consumer, Private and Business Banking in Kenya and East Africa, Edith Chumba.
“Before any decision is made, we provide three months of active client engagement and the clients are given a 91-day window to make a decision on the way forward, such as activating their accounts to continue with the relationship.”
She said the bank provides advisory services for the clients’ transition.
While the bank failed to respond directly to the claim that it has been shutting accounts with cash flows below Sh10 million monthly, a trader said his account has had an average of about Sh600,000 monthly but was still declared inactive.
“All customers are guided by the relevant terms and conditions that guide their accounts, as well as the relevant regulations that govern the banking industry as a whole,” Ms Chumba said.
-Business Daily
