What Happens When Customer With Loan Dies? Stanbic Bank Explains

• Stanbic Bank requires an individual to open a salary account with them to obtain an unsecured personal loan
• If a borrower loses their job, Stanbic Bank encourages them to contact the bank to discuss and arrange a feasible repayment plan
• Stanbic Bank told TUKO.co.ke that in cases where a customer dies while still servicing a loan, the bank has measures to protect the bank and the customer

Elijah Ntongai, a journalist at TUKO.co.ke, has more than three years of financial, business, and technology research expertise, providing insights into Kenyan and global trends.

Loans are one of the biggest profit drivers for banks, but despite this, non-repayment has continued to be a concern for many lenders, especially for unsecured loans that do not have a security attached to them.

How to get unsecured bank loan at Stanbic

Before qualifying for an unsecured loan at Stanbic, one needs to have a salary account with the lender and salary payments need to have been made to the account several times.

However, in cases where the employer has an MOU with the bank, the customer will only need one salary transaction to qualify for the loan.

"If your organisation has a scheme arrangement with Stanbic, you only need to channel your salary once, then you can borrow; if your company doesn’t have a scheme arrangement, then you need to bank for at least 6 months to qualify for a loan," a representative from Stanbic Bank told TUKO.co.ke.

Other requirements include the latest payslip, a copy of your ID and KRA pin, and six months' bank statements from your previous banker.

What happens in case Stanbic Bank customer with loan dies?

Banks and other financial institutions have developed a range of safety nets to prevent or reduce the threat posed by non-performing loan (NPL) portfolios, and tier-one lender Stanbic Bank is no different.

"If someone passes on, the loan is covered by life insurance included with all Stanbic loans. This protects both the borrower and their family in such unfortunate events. If someone is fired, please approach the bank to produce a manageable repayment plan," the bank explained.

How to prepare for retrenchment

Retrenchment is one of the causes of job loss and often occurs in the private sector. It mostly happens when a company or employer decides to shed some of its staff to reduce costs or, in other cases, in preparation to wind up operations.

In a bid to offer a soft landing spot for the affected employee, Stanbic Bank has redundancy insurance to cover such unfortunate situations.

The bank has two retrenchment packages: a standalone package and an embedded cover option. For example, Stanbic has a salary account called a smart direct account that has embedded insurance cover to cover retrenchment, life, and funeral expenses.

The embedded retrenchment cover on this salary account provides the account holder with an amount that is equivalent to 70% of their gross income multiplied by three in the event they are retrenched or made redundant.

Retrenchment cover on all Stanbic Bank loans

Stanbic Bank also has retrenchment cover on all loans. If someone has a loan with the bank and happens to be retrenched, the bank pays the monthly instalment for that facility for the next nine months.

This is subject to confirmation of employment status. Once someone gets another job, they are expected to resume fulfilling their repayment obligations.

"The retrenchment cover is quite useful in that it helps individuals transition easily from having a salary to either an irregular source or none at all. An individual is given a soft landing if they happen to have a smart direct salary account and a loan with Stanbic.

The customer will get the retrenchment cover on the salary account and on the loan account, therefore significantly reducing the stress of losing their job," the bank said.