Markets & Finance

Co-op drops mobile loan facilitation fee

cash

Co-op Bank borrowers will be spared payment of the 10 per cent excise duty tax charged on such fees. PHOTO | FILE

Co-op Bank has dropped facilitation levies for loans issued on its mobile platform even as it cut interest rates on the loans to comply with the rate caps.

The bank’s move on loans issued on its M-Coop Cash platform puts it at odds with rivals in the market such as Equity Bank, KCB and Commercial Bank of Africa.

Equity charges a one per cent appraisal fee on mobile loans and KCB levies 2.25 per cent negotiation fee. CBA charges 7.5 per cent flat fee on M-Shwari loans, which it does not classify as interest though.

“We shall not levy any fees or other transactions charges, only interest that is compliant with the new law and pro-rated with the number of months,” the bank said in a statement.

This means borrowers will be spared payment of the 10 per cent excise duty tax charged on such fees.

The bank offers one- and three-month tenor credit on its mobile platform. These include a salary advance loan dubbed Flexi repaid in one to three months at 1.16 per cent per month, offered up to a maximum of Sh100,000.

Customers can also borrow up to Sh200, 000 through a secured loan option, and a maximum of Sh50,000 for a business loan at 1.2 per cent monthly, both repayable within one month.

M-Co-op Cash had a loan book of Sh3 billion as at June 30.