- The product is part of the lender's move to stir financial inclusivity and boost the conventional market due perceived high level of risk.
- It supports transaction completion on both Paybill, Till, and person-to-person.
Equity Bank has unveiled a real-time overdraft facility that will see borrowers top up to Sh100,000 in a charm offensive against Safaricom's Fuliza and Faraja products.
The product, according to the insider with detailed knowledge, says it is part of the lender's move to stir financial inclusivity and boost the conventional market due perceived high level of risk.
Although details of the facility, including specific terms and conditions are yet to be made clear, an insider at the bank revealed to the Star that the plan comes with a flexible repayment plan of up to 30 days.
"The solution allows customers to top up any amount between Sh100 to Sh100,000. Borrowers can opt to repay the borrowed amount before the 30-day term concludes,'' the source told the Star.
On the website, the lender assures customers that they can borrow as many times as possible via the bank's mobile app, Equitel line, or dialing *247#.
It supports transaction completion on both Paybill, Till, and person-to-person.
Equity Bank's planned credit product mirrors Faraja, a partnership between EDOMx Ltd, a Kenya-based financial technology firm, and Safaricom.
The zero-interest credit service enables customers will to make purchases of between Sh20 and Sh100,000 and complete the payment within 30 days.
Safaricom, which is listed at the Nairobi Securities Exchange (NSE), is expected to enable EDOMx to offer the Faraja service to more than 606,000 businesses on Lipa Na M-PESA at a negotiated facility fee payable by the business.
EDOMx extends credit to businesses on the solution enabling them to receive payments immediately when a customer purchases Faraja.
The Central Bank of Kenya (CBK) gave EDOMx the nod to launch the product after it was cleared as a digital credit provider in March.
The new product is expected to pile more pressure on the rapidly depreciating Fuliza, an inaugural mobile overdraft in Kenya offered by NCBA, KCB and Safaricom.
Safaricom Plc's financial results for the first six months of the year announced last week show Fuliza recorded a 40 per cent drop in earnings as borrowers turned to the more affordable state-backed Hustler Fund.
Fuliza's contribution to Safaricom's bottom line in the review period dropped to Sh2 billion from Sh3.4 billion the previous year.
The drop is attributed to a reduction in loan size by Sh60, with the average loan per person dropping to Sh260 from Sh320.90 in the same period last year.
The telco attributed the slowdown in Fuliza borrowing to the government's Hustler Fund.
Introduced late last year, the fund has disbursed up to Sh30 billion at a competitive annual rate of eight per cent, calculated daily at a rate of 0.02 per cent.