Borrowers unable to access loans as KCB works to restore M-Pesa services

KCB, the country’s largest lender in terms of assets, is still working to fix a technical hitch that has blocked its customers from accessing loans via Safaricom’s M-Pesa platform. The service, dubbed KCB M-Pesa, has been down for more than a week now.

“KCB M-Pesa is experiencing a technical hitch affecting loan requests which we are working to restore. All other services are available on KCB M-Pesa and KCB Mobi,” the lender said in a statement.

The KCB M-PESA account is a virtual mobile based bank account that is offered exclusively to M-Pesa registered customers, allowing them to borrow micro loans between Sh50 and Sh1 million and save on their mobile phones at highly competitive rates. Interest earned is up to 6 per cent per annum. The platform offers free deposit and withdrawal services via the M-Pesa system.

KCB’s hitch comes just weeks after President Uhuru Kenyatta signed into law a Bill that would cap bank lending rates

The new capping law will now see borrowers get loans at a maximum interest rate of 14 per cent and will prompt banks to once again review their internal rates. Equity Bank moved to price mobile loans and credit cards based on the new law while KCB also capped interest on KCB M-Pesa loans.

Borrowers have called for an even further cut on the interest rates as most business people say it is the only way their enterprises will grow.

About a week and a half ago, the Consumers Federation of Kenya ordered all lending institutions offering mobile-based credit to cut their interest rate payable on such loans to a maximum of not more than 14.5 per cent per annum saying failure to which they will face the wrath of the law.

“All KCB loans are subject to the news laws and the bank is already compliant including mobile loans. M-Pesa loans will be charged a rate of 1.2 per cent monthly and deposits will earn 7.35 per cent per annum,” KCB said in a statement shortly thereafter.

KCB’s move made it the second lender to comply with the law after Equity Bank CEO James Mwangi announced that all loans including mobile loans would be capped at 14.5 per cent per year as provided in the new law which came into effect last week.

Commercial Bank of Africa’s M-Shwari announced a 7.5 per cent interest accrued on loans per year. However, it said deposits will earn interest rates of 7.35 per cent being 70 per cent of CBR.

Co-op Bank’s Mco-op Cash will be charging a fee of 10 per cent for a monthly loan, 12 per cent for a three-month facility and 7 per cent for its monthly business loan and secured personal loan.

 

“We are still experiencing a system glitch with KCB M-PESA borrowing services. All other KCB M-PESA services are still up and running,” the lender said in a statement issued just hours ago.

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