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StanChart sets 6.58 percent rate on its mobile lending

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Stanchart CEO Kariuki Ngari addressing shareholders on March 14, 2023. PHOTO | WILFRED NYANGARESI | NMG

Standard Chartered Bank Kenya has set an interest rate of 6.58 percent for short-term loans disbursed through its mobile lending platform SC Juza, which is on trial before launch in a few months.

This makes it cheaper than the rates charged on rival platforms KCB M-Pesa and M-Shwari for 30-day loans.

M-Shwari, offered by Safaricom and NCBA Bank, issues loans at an interest rate of nine percent consisting of loan fees of 7.5 percent and 1.5 percent excise duty.

Read: StanChart loans to sister banks rise to Sh83bn

KCB M-Pesa is charging 8.85 percent interest on a one-month loan which is inclusive of 20 percent duty, which increased from 8.79 percent in April after a rise in the Central Bank Rate to 9.50 percent from 8.75 percent by the banking regulator. Banks describe the rates they charge on the short term loans as either processing, loan or facility fees.

StanChart’s SC Juza platform allows one to borrow from Sh1,000 to Sh100,000 every week. The cost of the short-term credit comprises a processing fee of 5.5 percent and interest rate of 1.08 percent per month.

An additional service fee of 5.5 percent is applicable for loans that have not been repaid within the first 30 days.

StanChart says the SC Juza App is on trial for a few months before it is rolled out in the market where there is huge demand for short-term loans by households and small businesses.

“We want to do this for at least four to six months before we launch,” StanChart Kenya chief executive Kariuki Ngari told the Business Daily.

“We started two-three weeks ago. We just want to see how it flows … We are testing internally and with a few clients to see how the response is like. Then we do a launch.”

The rollout of SC Juza had been delayed due to new data privacy policies introduced by Google late last year.

Read: Stanchart wealth unit assets rise to Sh148bn

He said Juza will complement the lender’s strategy and heavy investments in digital banking to enhance efficiencies through the expansion of online services while de-emphasising brick-and-mortar operations, hinting at a rollout of a mobile lending platform targeted at SMEs.

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