Ncba and Safaricom have raised the minimum loan on the mobile lending platform M-Shwari four times to Sh2,000 in a move expected to reduce defaults largely by borrowers taking smaller amounts of money.

Those people have been borrowing a minimum of Sh500, through M-Pesa, on the M-Shwari platform will now be required to borrow atleast 2,000

The changes took effect on Monday and NCBA has started communicating the new credit limit to customers who qualify for it.

Those who do not qualify to borrow at least Sh2,000 on the monthly loan product have been relegated to use the daily overdraft service Fuliza which is more expensive, but structured to lower defaults.

Borrowers pay a facility fee of 7.5 per cent when taking the M-Shwari loans, amounting to an annualised interest rate of 90 per cent.

On Fuliza, the fee is 1.083 per cent or 395.2 per cent annualised, underlining the high cost of using the short-term credit services regularly.

This means a borrower who used to part with Sh56.25 for a Sh1,000 M-Shwari loan will now be set back Sh243.68 for a Fuliza debt that lasts a month.

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