Digital lender, Tala, will now grant borrowers the option picking a repayment date that best suits their incomes cycles.
The limit is capped to 61 days and no surcharge applies for borrowers who repay within the time frame.
Currently, most digital lenders have a time limit not exceeding a month, condemning borrowers to high daily penalties in case of default.
"Our customers can now time their due date around their next payday and other financial obligations, making repayment easier, and enjoy lower fees depending on the duration they choose,'' Tala’s Country Growth manager Annstella Mumbi said.
She added that the firm is planning to bring more flexible products to the market as the sector aligns with the new digital lending law.
''We will be introducing many new product changes this year to give Kenyans more financial access as well as the confidence to reach their financial goals,'' Mumbi said.
The firm plans to review its credit limit upwards to grow with its customers. It currently lends up to Sh30,000 payable within a month.
The lender was the first to adopt risk-based loan pricing, with customers with positive ratings attracting a flat rate of as low as four per cent.
Tala charges an interest rate of between 5-15 per cent depending on repayment duration.
Those paying within 21 days are charged a flat rate of 5-11 per cent while those who pay after 30 days are charged between 7-15 per cent.
The company is a pioneer member of the Digital Lenders Association of Kenya (DLAK), a lobby formed to monitor the self-regulation of payday lenders in the country.
The company has disbursed credit facilities worth over $2.7 billion (Sh300 billion) in loans to more than six million customers in the country since 2014 hailed ongoing reforms in the sector.
''The regulation of the sector will bring sanity into the market and open the potential financial inclusivity to spur social-economic transformation,'' Tla said in a statement.
President Uhuru Kenyatta signed into law the Central Bank Amendment Bill 2021, bringing digital lenders into the ambit of the Central Bank of Kenya.
Non-deposit-taking credit-only providers have remained largely unregulated for a long time, with several abusing the freedom to charge high interests and debt shame their customers.
