KCB Bank Kenya has taken control of two companies after they defaulted on loans totaling Sh1.93 billion, as the lender steps up efforts to tackle rising non-performing loans and protect its balance sheet.
The move signals an increasingly assertive approach by banks to recover debts amid a challenging economic climate.
The lender-appointed administrators have assumed management of Korara Highlands Tea Factory Limited, which owes Sh1.155 billion, while a receiver manager has taken over Elson Plastics of Kenya Limited, which is indebted by Sh775 million.
PVR Rao and Swaroop Rao Ponangipalli were named joint administrators of Korara Highlands Tea effective September 22, 2025, while Joy Vipinchandra Bhatt was appointed receiver and manager of Elson Plastics from September 18, 2025.
In Kenya, administration seeks to rescue a distressed company by pausing creditor actions, whereas receivership allows a secured lender to enforce claims on pledged assets without halting other creditor actions.
Receivership typically applies to debts contracted before the 2015 Insolvency Act, which introduced administration as a mechanism to revive struggling companies before considering liquidation.
Korara Highlands Tea, located in Kericho County, had previously received two loan moratoriums from KCB to cope with the economic effects of the Covid-19 pandemic, a year before the takeover. Despite these efforts, the company’s financial troubles persisted.
KCB’s non-performing loan ratio for the first half of 2025 stood at 17.9 percent, slightly above the sector average of 17.6 percent, highlighting the increasing pressure on lenders to recover unpaid credit.
“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 Swaroop Rao Ponangipalli in a notice published on Wednesday.
KCB had initially financed Korara Highlands Tea to set up the factory and cover working capital needs, including installing solar electricity to cure tea leaves, replacing 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,” said Titus Kigen, chairman and founder of Korara.
Kigen noted the loan also allowed the purchase of efficient machines, cutting heat loss and reducing costs.
Elson Plastics had borrowed funds to buy machinery and cover working capital. However, despite multiple restructuring attempts, the company failed to meet its debt obligations.
KCB has also appointed Rao and Swaroop as administrators for Labh Singh Harnam Singh Limited, a major truck and bus body builder, over a default of Sh1.1 billion.
Banks in Kenya have sharply reduced loan write-offs from Sh33.3 billion in 2023 to Sh7 billion last year, reflecting a shift towards aggressive debt recovery, including auctions and liquidations, to safeguard profits. The Central Bank of Kenya requires lenders to write off loans only when they have no realistic expectation of recovery.