Borrowers on NCBA-owned mobile lending platform M-Shwari have been handed a relief after the lender maintained its lending rate of 7.5 percent against the backdrop of the Central Bank of Kenya raising the Central Bank Rate (CBR) from 8.75 percent to 9.5 percent last week.
The CBR is usually used as the benchmark rate for formal sector credit providers.
“CBK recently reviewed its Central Bank Rate from 8.75 percent up to 9.5 percent. However, the facility fees charged on M-Shwari loans will remain unchanged at 7.5 percent before excise duty. Loans paid back within 10 days will be charged at 6 percent,” M-Shwari told its customers.
Loans on the platform are usually repaid within 30 days.
The lender’s decision is in contrast with industry expectations and moves by rivals like KCB M-Pesa which last week hiked its rates to 8.85 percent up from 8.79 percent as a result of the CBK decision.
This is the fourth time within a year that the CBK has raised the CBR and lenders have been quick to react by raising borrowing costs whenever new rates are announced.
The apex bank raised the CBR from seven percent to 7.5 percent in May last year, then pushed up again to 8.25 percent in September before hiking it further to 8.75 percent in November.
Last year in September when the CBK raised the CBR from 7.5 percent to 8.25 percent, NCBA Group was one of the lenders among others that raised interest rates for their loans the following month.
During last week’s announcement of the new CBR, the banking sector regulator said the CBR hike is meant to fight inflation.
NCBA lent Sh729 billion in digital loans last year, an addition of Sh145 billion from the Sh584 billion disbursed in mobile credit the previous year in the six countries that the lender operates.
The billions, inclusive of both M-Shwari and Fuliza platforms, stamped the bank’s dominance in the local digital loans market amid surging popularity for the microcredit facilities.
