KCB sets aside Sh30bn for mobile loans over coronavirus crisis

KCB Group #ticker:KCB has set aside Sh30 billion credit facility for individuals and businesses grappling with the effects of coronavirus pandemic.

The funds will be available through its mobile lending platform KCB M-Pesa, which is operated in partnership with Safaricom #ticker:SCOM.

The lender says it will extend borrowing limits and repayment periods for customers who qualify and those with existing loans during the next 90 days.

The service is available to any M-Pesa registered subscribers, lending small loans from Sh50 to Sh1 million, depending on the customer’s credit scoring. The loan facility offers 30-day, 90-day and 180-day loans with interest rates of between two percent and six percent.

KCB Group chief executive Joshua Oigara, in a statement on Friday, said that funds will also be available for “customers who had been blacklisted at the Credit Reference Bureaus (CRBs) but have since cleared their facility”.

“We shall open credit limits to those customers who had been listed because of defaulting on small amounts, but who are now repaying their loans. Customers who need relief are advised to get in touch with us to work out the respective support areas,” said Mr Oigara, who is also the Kenya Bankers Association (KBA) chairman.

The KCB facility is part of measures announced by the Central Bank of Kenya and KBA to alleviate economic effects caused by the coronavirus (Covid-19) outbreak.

Telecoms and commercial banks have removed transaction costs for customers who move money between their mobile wallets and bank accounts in a push for cashless payments aimed at curbing the spread of the coronavirus.

Mobile telephony firms—Airtel and Safaricom — have also waived transaction costs on mobile money transfers under Sh1,000 until June.

Other relief measures available to individuals and small business owners include renegotiations of the loan contracts to either allow repayment moratoriums, or extending the repayment periods up to one year.

KCB said it will foot the legal costs associated with the loan restructuring. Other banks are yet to announce individual measures taken.

“We have a role to continue supporting the economy and stimulating growth. The best remedy as our economy starts to slow down is to support our customers to get along with their lives, and to protect jobs by providing additional lending. We have been in crises before, but if we pull together, even in this environment, we will get the solutions Kenya needs,” Mr Oigara said.

KCB has more than 22 million KCP M-Pesa customers who borrowed Sh212 billion in 2019 which is operated in partnership with Safaricom.