clients stranded as First Community bank on the verge of collapse

According to the Weekly vision,  a local media platform, the Cash-strapped First Community Bank’s woes are far from over. the local daily reports that  clients are facing difficult situations at the moment as they can no longer access their accounts for withdrawals. That the situation at First Community Bank has been a source of growing concern for depositors in recent months is no longer news. The source says the bank will soon close down or be put under receivership by the Central Bank of Kenya to save customers’ money from sinking with the bank.

One client in Garissa town is the latest victim of the bank. The client’s family has a patient suffering from kidney failure, unfortunately for them cannot access funds they had deposited in the bank after conducting a fundraising event to meet the costly medical expenses where Ksh.3m was raised and deposited at First Community Bank.

Sometimes around 22nd December 2022, the family went to the bank to make withdrawals for the patient’s treatment, but they were shocked when the bank informed them that the maximum withdrawal they could make was only Ksh. 20,000.

The family withdrew then only Ksh. 20,000 out of the Sh3m deposited, attempts to make further withdrawals have been futile. The only answer given by the branch manager is that the bank does not have cash since they only do withdrawals and no deposits.

It is worth noting that the bank is unable to meet its obligations and it has been going on for some time now. There is fear that the bank could be sinking with the customer’s deposits and that is why they have put maximum withdrawal at only Ksh. 20,000 per week for each customer.

Other clients at the Garissa Town branch have experienced the same. Another client had gone to withdraw Ksh. 5,000 but was turned away by the teller who indicated to him that there is no money, while another client only withdrew Ksh. 2,000 instead of the 10,000 that he desperately needed.

First Community Bank first started facing liquidity problems in mid-2022, but management dismissed the reports then as rumours from ‘malicious sources’. However, by October 2022, the complaints persisted, and a series of panic withdrawals badly impacted the bank as it placed limits on cheque clearance and withdrawals following an advisory from the banking sector regulator, the CBK.

To save its dwindling financial fortune, the bank once assured its customers that it was working on ways to solve the liquidity problem, but close to three months later, the situation remains unchanged. The situation seems to have gotten worse, as some customers now say they cannot even access the capped amounts. As of January 2023, the maximum amount that a customer could withdraw was 20,000 Kenyan shillings per day.

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