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Wednesday, October 21, 2020

Some banks, mobile lending apps stop giving mobile loans

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Mobile Loan Kenya: Banks offering mobile loans and mobile loan firms such as Tala and Branch have stopped giving mobile loans to Kenyans. The freezing of the loans come in the wake of the coronavirus scourge, which has left populations out of cash and economic wherewithal.

Mobile applications such as Timiza which is owned by Absa Bank Kenya (formerly Barclays Bank Kenya) have stopped issuing mobile loans to borrowers regardless of borrowing history. Others like Tala and Branch have also followed suit.

The apps have frozen lending to individuals and instituted tough measures before anyone can access credit.

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“Due to the Covid-19 crisis, decisions on loan applications will have delays of up to ten days,” Tala told customers applying for a loan on its app. Branch has instituted tough vetting criteria with questions on whether one’s income has been affected by the virus. Unsuccessful loan applicants are told to try four days later.

In some cases, mobile loan applications are now taking up to 10 days without a guarantee that any cash will be offered. Previously, it took seconds to get the money.

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The freezing of the loans is out of fear that borrowers will default on the loan repayments. However, while private mobile application lenders such as Tala, Branch, and Zenka may fear running out of business, it is not clear why mainstream banks such as Absa have followed suit. Reports have also alleged that other popular lending apps such as Mshwari are also not extending loans as before.

Operators of the popular digital mobile loan applications cite the economic uncertainty caused by the deadly virus, with most saying that they were “reviewing” their businesses.

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In the same vein, whereas traditional bank borrowers have gotten repayment relief from banks, the same has not been extended to mobile borrowers, pointing to how risky mobile borrowing is perceived in Kenya. Mobile Loan Kenya.

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