What you need to know:
- Mobile loans are among the most popular innovations offered by banks and saccos.
- Pioneer mobile lender CBA’s Mshwari charges a 7.5 per cent interest,
Kenyans seeking instant mobile loans from Kenya Commercial Bank (KCB) should brace for higher charges after the bank increased the KCB M-Pesa rate to 7.5 per cent from 4.08 per cent.
Users, mostly businesspeople who have used the platform over time due to its attractive rates, were shocked to learn of the new charges.
“I used to borrow Sh40,000 that I paid back with Sh1,632 interest, this enabled me to conceal my financial challenges from my colleagues, friends and relatives,” said a devastated user.
7.7 PER CENT
Under the current terms, the borrower will pay back Sh40,000 with Sh3,001.60 as interest.
The user lamented that the new charges indicated KCB Group was yet to start using a digitised credit scoring method to gauge creditworthiness of its customers where those with high scores receive loans charged at a cheaper rate as new borrowers are subjected to punitive interest rates.
On her Twitter handle, Ms Beltinah sasi wrote, “Does this interest on KCB Mpesa loan cut across or it’s me pekee...Alafu (then) how do you (KCB) guys just twist this figure without having in mind safe borrowers like some of us who repay on time?”
KCB Group responded to @beltinah sasi saying the rate had been increased for all users but did not give further details.
“Hello, the interest has been updated for all KCB Mpesa customers both defaulters and those on good books,” it said.
Mobile loans are among the most popular innovations offered by banks, saccos as well as loans’ only based lenders such as Tala, Branch, M-shwari among others.
Pioneer mobile lender CBA’s Mshwari charges a 7.5 per cent interest, Barclays’ Timiza (6.17 per cent) while the one per cent facilitation fee charged on M-Pesa’s Fuliza overdraft facility will be equivalent of 360 per cent annually.
Last May, Central Bank of Kenya partnered with KCB, CBA, Co-op Bank, Diamond Trust Bank and NIC to launch Stawi mobile loan product at equivalent annual interest of nine per cent, plus facility fees of four per cent, insurance cost of 0.7 per cent and excise duty at 20 per cent of the facility fee.