CBK urges Mobile lenders to lower charges

By Mercy Imali

The Central Bank of Kenya (CBK) has urged banks to lower the cost of mobile phone-based loans. Pushed to the wall, Wananchi have increasingly raised concerns about high interest mobile loans.

“This is where we are working with banks … to go beyond the law. You have seen how we have been doing things in terms of customer centricity, the way they have to relate to their customers,” Dr Njoroge said.

CBK Governor Patrick Njoroge said pricing of some of the mobile phone-based loans includes a huge component of fees, which is outside regulatory control. He assured Kenyans that discussions would go beyond the interest on loans to processing charges and facilitation fees.

Dr Njoroge said, “This is a bit more complicated. The issue is not just to look at the interest rate component, but other charges as well. The charges are not part of that interest cap thing.”

M-Shwari, a product of Safaricom and Commercial Bank of Africa charges a “facilitation fee” of 7.5 per cent on credit regardless of duration.

Banks and other mobile phone-based lenders have dodged a government cap on interest of four points above the central bank’s benchmark interest rate.