The bank has been forwarding the names of defaulters to Safaricom barring them from accessing more loans. According to Business daily, over 25,00o of those blacklisted have already cleared their outstanding debts but they will not be granted loans for the next five years. Defaulters may be barred from further borrowing or maybe allowed to borrow at higher interest rates.
Mshwari was set up by Commercial Bank of Africa jointly with Kenya’s leading mobile phone service providers, Safaricom. The service allows Safaricom subscribers to access small loans and set up accounts without necessarily having to go to the bank. The credits are granted according to their Mpesa cash flows. The loans are payable in a period of 30 days at an interest rate of 7.5 percent. CBA revealed that they grant over 25 000 small loans amounting to 7.5 million shillings per month.
Other banks have also launched their own credit services with Safaricom. Kenya Commercial Bank’s M-benki looks to open over 12 million accounts by the end of the year. Family bank is targeting a total of 5 million accounts by December.