Loans can wreck marriages

By John Kariuki

Thanks to microfinance institutions and banks that offer easy loans, it is becoming easier for many people to access credit.

But the convenience comes with a previously unseen consequence of marital strife, when one fails to pay and a spouse realises that he or she has been kept in the dark.

Even worse is when household goods that are not exclusively owned by either husband or wife, but offered as loan security are attached, aggravating domestic suspicion and strife.

According to a credit officer in a microfinance institution, who requested not to be named, some women have been easily getting their husbands identity cards, falsifying their signatures and naming them as guarantors in loan application forms. And when such men discover this betrayal of trust, there is often some drama in banking halls.

"I have had to deal with a problem of separating warring couples in my office," says the credit officer.

Luke Wainaina, a banker, remembers a woman who borrowed Sh100,000 and she had another loan of Sh70,000.

"At some point she began defaulting and I enquired," says Wainaina.

The woman went to the bank and explained that other creditors were hot on her heels.

"I advised her to come with her husband, whom she had named as a guarantor," says Wainaina.

Her husband knew of the second loan (Sh100,000) and paid the outstanding instalments.

"She continued paying the loan for a few months but began faltering again," says Wainaina.

Several minutes

He says that he and a few bank officials went to this woman’s home to assess the property that had been offered as security.

"We found her husband at home and he was deeply shocked to learn that his wife had another loan. The man was speechless for several minutes and when he absorbed the shock, he came to bank the following day with his wife," says Wainaina.

"The man was even more stunned when we presented him with the guarantor’s commitment form that he had signed."

The photocopy of the ID card was his and the signature, but he had neither appended it himself nor seen this form before.

"In front of us, the woman admitted forging the signature and filling in the form herself."

The man paid the outstanding loan balance in full and parted ways with his wife.

Phyllis Kamau remembers how she and her husband took separate loans for a development project.

She borrowed Sh500, 000 and her husband Sh700,000. But at her husband’s insistence, she deposited the money in his account for what he claimed "to ease making payments for the project".

"After I transferred the money, I learnt of my husband’s real intention," says Kamau.

The man took all the money to fund his higher education. The couple has since parted ways and Kamau is paying a loan that was swindled out of her control.

Eliud Githinji, a banker, says that to stem the rising cases of one spouse forging the other’s signature as a guarantor, his bank requires both spouses to sign the loan applications forms at the bank.

Phone numbers

"In a situation where one of them is not available, we require their phone number so that we can call and get consent to proceed with the loan application. We then send the forms for them sign," says Githinji.

Githinji says that to avoid the embarrassment that bank employees have gone through when attaching property in the event of default, his bank now requires loan applicants to supply them with title deeds and documents of every property they offer as security.

"If the papers are in order, we release the loan," he says.

Githinji says that in the absence of such documents, the bank now requires loan applicants to swear an affidavit that all the property listed as security are solely theirs — not their husbands or wives — or jointly owned.

Githinji traces the cause of the many falsification cases in the microfinance sector to the industry’s lax rules.

"There are no lending rules that cut across the board unlike with regular bank loans where there are stringent vetting procedures, including the recently introduced credit reference bureaus," he says.

Saying that there is no system that connects microfinance institutions, Githinji reveals that this loophole allows people to join to several microfinance institutions, over borrow then find up in financial difficulties.