MASERU — Standard Lesotho Bank says although it remains committed to helping small businesses start it is worried by the number of customers who default on their loans. This was said by the head of Personal and Business Banking, Mike Edgcumbe, at the launch of the new Small and Medium Enterprises (SME) branch on Wednesday.
“The only worrying aspect is that we have already had to write off M3.4 million, due to SME customers who have failed to repay and we currently have in excess of M2 million in loans which have outstanding payments due,” Edgcumbe said.
He warned that a higher default rate might force the bank to implement strict requirement for getting loans.
“We have to change this trend and we would appeal to all SME clients and to partnering agencies and government departments that support SMEs, to heed the payment requirements, as failure to pay, may in future lead to the bank once again not wanting to lend to this market, if they are viewed as too high a risk due to non-payments,” Edgcumbe said.
He however said despite this problem the bank would continue to support Basotho to start small businesses by making services easily accessible.
“With the introduction of new systems and processes we have improved the turnaround times on approvals of Unsecured Personal Loans,” he said. He said because of the new systems it now takes between six hours and a day for customers to get their loans, In the past it used to take between 10 days to three weeks to get a loan approved. He said the bank has also relaxed the qualifying requirements so that clients qualify for larger loans.
The result is that, Edgcumbe said, the bank has grown its overall loan book over the past two years in the Personal and Business Banking from M1 billion to M2.275 billion. Personal Banking clients account for M1.892 billion of that book while the remainder is in Unsecured Personal loans. Edgcumbe said the Tsau-Tsau Quickloans launched for the SME Market in March last year has enhanced access to loans.
“This was a revolutionary change to how we do banking, particularly in lending product into the lower end of the SME market where traditionally the bank would not lend as these clients seldom have security, financial statements and cash flow projections,” he explained. “We now lend into this market without any of the previous rigorous requirements.
He said the Business Banking has lent M382 million of which M53.7 million is directly to SME customers.”
“Since the launch of the Tsau-Tsau loans last year we have already paid out in excess of M25 million in loans to this market,” he said. Edgcumbe also revealed that Standard Lesotho Bank was in the process of introducing a specialised account for SMEs. This new product will be available in the market within the next two months. “In terms of our footprint and alternative channel offerings, we have undertaken some key strides.
The number of Standard Lesotho Bank ATM’s has increased from 52 in 2010 to the current 70 ATM’s and an additional five machines to be commissioned over the next few months, with an expected total of 75 ATMs by August this year.” “Some of the new ATMs will be in strategic locations such as Morija and Pitseng where these services were not previously available”.
He said the bank had increased the number of Point of Sale terminals from 167 to 218.