Kenyans seeking instant mobile loans from Kenya Commercial Bank (KCB) should brace themselves for higher charges after the bank increased the KCB M-Pesa interest rate to 7.5% from 4.08%.
Through tweets in response to queries from subscribers, the bank has confirmed the increased interests rates.
Hi, yes a business decision has been made to increase the interest charged for the KCB Mpesa loan. ^VB
— KCB Group (@KCBGroup) August 2, 2019
Hi, effective 02 – 08 – 2018, KCB MPesa loan interest rate has been reviewed to 7.05% per month from 4.08 per month. *BM
— KCB Group (@KCBGroup) August 3, 2019
The platform has been popular with subscribers due to the attractive interest rates as well as convenience, especially for business people who need short term loans to boost their businesses.
KCB MPESA has also served as a cheaper alternative to M-Shwari which is also available on Safaricom’s mobile wallet platform.
The hiked interest rate is staggeringly high especially for those with higher limits, for example if you borrowed Sh40,000 under the previous rates, you’d be expected to pay back with an interest of Sh1,632 compared to the new rates, where borrowing a similar amount means you’ll have to pay Sh3,001.60 instead.
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 M-shwari charges an interest of 7.5%, Barclays’ Timiza 6.17%, while the 1% facilitation fee charged on M-Pesa’s Fuliza overdraft facility will be equivalent of 360%
In May, the 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 9% plus facility fees of 4%, insurance cost of 0.7% and excise duty at 20% of the facility fee.
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