Helb signs banks to track borrowers with smart cards

The Higher Education Loans Board (Helb) is set to begin disbursing funds to students using pre-paid electronic cards that will allow for tracking of borrowers’ future bank transactions.

Helb has partnered with Family, KCB Group, Chase Bank, National Bank, Equity Bank, Jamii Bora Bank and NIC Bank to develop the cards, which students will use to pay for tuition, upkeep, buy books and stationery.

The cards will also help to build financial profiles of Helb loan beneficiaries, including their repayment records, helping the board to track borrowers’ transactions in future.

“We (also) want to start building the student credit history which will help the student as they build their credit scores for purposes of future borrowings from financial institutions,” said Helb chief executive Charles Ringera in an interview.

The Helb cards will have tap-and-go payment features based on the Near Field Communication technology.

READ: Banks seek smartcard deal with Helb to grow fees income

The board currently sends between Sh27,000 and Sh52,000 to undergraduate students’ bank accounts in two equal instalments while Sh8,000 is wired directly to universities as tuition fees.

The card is expected to reduce the growing cases of misuse of student loans where funds meant for school fees is splurged on drinking alcohol and buying electronics such as smartphones and home theatres.

“The card has e-wallets (such as) tuition, upkeep, books and stationery,” said Mr Ringera. “Therefore, money meant for school fees cannot be used for any other purpose.”

Helb hopes that prudent usage of the student loans as well as ability to track borrowers in future will help to check the default rate. The agency is currently pursuing 75,498 loan defaulters who owe the board Sh8.3 billion.

Since inception in 1995, Helb has disbursed more than Sh44 billion to about 400,000 beneficiaries but more than a third or 38 per cent of its loan book is dormant.

The board has prescribed hefty fines on loan defaulters besides hiring debt collectors and prosecutors to track down, prosecute and recover the cash.

Helb also sees the cards as a fast, cheaper and more convenient way to issue loans to learners compared to the use of bank transfers which are costly and involve bulky paperwork.

“Rather than sending bulk payments to universities which must be reconciled later, the cash is carried by the student using plastic money.”

The board, in partnership with Family Bank and London-based payments firm sQuid, is currently piloting the technology at the Kenya Methodist University (KeMu) using a plastic dubbed sQuid campus card.

The card allows learners to receive their Helb loans directly as e-money, withdraw cash from Family Bank ATMs and tap their cards on point of sale terminals to pay for meals, accommodation, books, photocopying and other items on campus.

The KCB Group is also testing its cashless payment solution at Egerton University where learners will use their cards to receive Helb loans and pay university-related expenses.

“We aim to deploy close to 80,000 cards in phase one of the programme by end of May,” said KCB in a statement.

Helb has this year disbursed Sh5.4 billion in loans to about 125,000 students, whetting the appetite for Kenyan banks which stand to rake in millions in income from commission and fees charged on processing such payments.

Mr Ringera said that the cards would also be linked to the Visa and MasterCard network to allow loan beneficiaries to access funds from ATMs and shop for goods and services at retail stores.

The cards can also be used to receive cash disbursements for different purposes such as pocket money, field work research and internship stipends.

“The card will also have other advantages for the student, as the parent can also open another e-wallet through which they push their allocations through,” Helb said in a statement.

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