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KCB takes over two firms for defaulting on Sh1.9bn debts
Mumias Sugar receiver manager Ponangipalli Venkata Ramana Rao (2L) appearing before the National Assembly Labor and Social Welfare Committee chairperson Johnson Sakaja at the Red Cross Building on December 3, 2019.
KCB Bank Kenya has taken over two companies for defaulting on loans amounting to Sh1.93 billion, extending its aggressive loan recovery strategy aimed at reducing its stock of non-performing credit facilities.
KCB-appointed administrators announced that they had taken over Korara Highlands Tea Factory Limited, which is in debt to the tune of Sh1.155 billion.
A receiver manager appointed by KCB has also assumed the management of Elson Plastics of Kenya Limited, which owes Sh775 million, according to sources familiar with the developments.
KCB has appointed PVR Rao and Swaroop Rao Ponangipalli as the joint administrators of Korara Highlands Tea Factory effective September 22, 2025 while Joy Vipinchandra Bhatt is the receiver and manager of Eslon Plastics of Kenya effective September 18, 2025.
In Kenya, administration pauses creditor actions to try to rescue the whole company, while receivership lets a secured lender enforce against the pledged assets without an automatic pause for other creditors.
Receivership is applied on debts that were contracted before September 2015 when the Insolvency Act 2015 came into force to introduce administration—where efforts are first made to revive a distressed firm before liquidation is considered as a last option.
The takeover of Korara Highlands Tea, based in Kericho County, comes a year after KCB announced that it had extended a lifeline to the company by offering it “two loan moratoriums to weather the effects of the Covid-19 pandemic,” according to a statement released in September last year.
A spike in non-performing loans (NPLs), which have not been serviced for more than 90 days, has seen financial institutions resort to aggressive loan recoveries that triggered a wave of auctions, receiverships, and liquidations.
KCB’s NPL ratio in the first half of 2025 was 17.9 percent, which is slightly above the sector average of 17.6 percent in June 2025.
“Following the appointment, all the affairs and business of the company (Korara Highlands Tea) are being conducted by the joint administrators whose powers extend to all assets and undertakings of the company. The power of the directors in terms of dealing with the company’s assets ceased,” said Mr Swaroop in a notice published in the newspaper on Wednesday.
The increased cases of receiverships or administrations come against a backdrop of elevated credit risk across the banking sector amid a tough operating environment characterised by high interest rates and consumer prices.
KCB extended the credit facility to Korara Highlands Tea to set up the factory and finance working capital needs of the company, including installing solar electricity, which the company would use to cure tea leaves, helping it transition from using dirty and harmful firewood.
“Through the [KCB] Bank’s finance, we acquired solar panels that helped reduce our electricity consumption by four percent as a result of acquiring 380kW Solar PV,” Titus Kigen, chairman and founder of Korara, was quoted in the statement released by KCB.
Mr Kigen, who founded the company in 2017, said the loan enabled the firm to acquire efficient machines with less heat loss, enabling it to cut costs.
However, it appears as if the company found itself in financial distress as it was flooded with several other cases in which it was being accused of default.
Eslon Plastics took credit facilities to purchase machines and fund working capital requirements and when the business ran into financial difficulties, it approached KCB for several restructurings which did not help it meet its debt obligations.
KCB also tapped Rao and Swaroop to be the administrators of Labh Singh Harnam Singh Limited (LSHS), Kenya’s oldest and one of the largest truck and bus body builders for default on a Sh1.1 billion loan.
Kenyan banks cut loan write-offs from Sh33.3 billion in 2023 to Sh7 billion last year as they opted for aggressive recoveries that triggered the auctions and liquidations.
Banks’ forceful pursuit of unpaid loans underlines a shift in approach in the face of rising NPLs and the push to protect profits.
The Central Bank of Kenya, the financial regulator, requires lenders to write off loans that they believe they no longer have a realistic expectation of recovering.
