NCBA Bank AutoSweep Feature Explained

If you have an account with NCBA Bank, you may have received a notification about a new feature called AutoSweep. NCBA Bank Kenya has introduced a new feature aimed at ensuring seamless loan repayments. This feature is reported to be able to automatically transfer funds from a customer’s linked accounts if the designated primary repayment account lacks sufficient funds on the loan’s due date.

The AutoSweep feature is part of NCBA’s broader strategy to minimize loan defaults and late payments, ensuring that customers can meet their financial obligations without incurring penalties or negatively affecting their credit scores.

How NCBA AutoSweep Works

The AutoSweep feature is an automated system that links multiple accounts held by a single customer under the same customer number at NCBA Bank. When a customer has a loan repayment due, and the primary repayment account does not have sufficient funds to cover the repayment, AutoSweep steps in to bridge the gap. Here’s how it functions:

1. Automatic Transfer of Funds: If your primary loan repayment account does not have enough money on the due date, the AutoSweep feature will automatically transfer the required amount from your other accounts linked to the same customer number. These could be savings or current accounts.
2. No Action Required: The process is fully automated. Customers do not need to initiate any transfers or take any action when their primary account is low on funds. The system automatically detects the shortfall and triggers the fund transfer from other accounts.
3. Prioritization of Loans: If a customer has multiple loans with NCBA Bank, the AutoSweep system will prioritize repayments based on the due dates of the loans. The loan with the earliest due date will be settled first, ensuring that all obligations are met in a timely manner.
4. Exempted Accounts: Not all accounts are subject to AutoSweep. Fixed deposit accounts and junior savings accounts are exempt from this feature. The system targets accounts with less withdrawal restrictions, such as savings and current accounts, where funds are more accessible.

Implications for NCBA Customers

The introduction of the AutoSweep feature has several implications for NCBA customers, particularly those with multiple accounts and loans with the bank. Here’s what customers need to know:

1. Comprehensive Account Monitoring: The AutoSweep feature gives NCBA Bank a comprehensive view of a customer’s cash balances and loan obligations across multiple accounts. This allows the bank to ensure that funds are available to meet loan repayments, reducing the likelihood of missed payments.
2. Unavoidable Participation: Customers cannot opt out of the AutoSweep feature. Allowing customers to deactivate this option would increase the risk of missed payments and the associated penalties. The feature is embedded as part of the bank’s exercise of its right of set-off, a legal provision outlined in the loan contract terms and conditions.
3. Risk of Fund Depletion: While AutoSweep ensures that loans are repaid on time, it also means that funds in a customer’s other accounts may be depleted unexpectedly to cover loan repayments. Customers with multiple accounts need to be aware that their balances in these accounts could be reduced if their primary repayment account does not have sufficient funds.
4. Impact on Cash Flow: For customers who rely on specific accounts for daily expenses or business transactions, the automatic transfer of funds could impact their cash flow. It’s important for customers to maintain adequate balances in their primary repayment accounts to avoid disruptions in their financial activities.
5. Late Payment Fees: If there are insufficient funds across all linked accounts, the loan repayment will remain unsettled, and the customer will incur late payment fees or penalties. However, AutoSweep aims to minimize this risk by using available funds from other accounts.