Digital lending platform Tala has launched a new credit option known as ‘Jichagulie Due Date’ that enable customers to choose a loan repayment date that best matches their income cycle or salary pay date.
Tala says the new feature gives borrowers more power and flexibility in terms of making credit decisions.
The new feature, Tala notes, was developed after a rigorous user research, which engaged its customers.
“This new flexible credit option will give borrowers the power to choose the due date that works best for them, not Tala,” says Tala country manager Annstella Mumbi, adding that the firm seeks to provide customers with essential information to enable them make the right credit decisions.
“Tala enables responsible borrowing and advances financial literacy through a robust library of educational content, which includes articles related to loans, savings, business, and general expenses.”
The platform, which was launched in Kenya in 2014, now boasts more than 6 million customers worldwide.
The platform, whose Kenyan borrowers are mostly aged between 18 to 40 years who are trying to raise capital for their businesses, says it leverages proprietary technologies to provide financial services to people that traditional and mainstream lenders do not serve.
Peer-to-peer (P2P) lending platforms, offering loans ranging from as little as Sh100 to several thousands, have proliferated in Kenya thanks to a huge appetite for credit.
According to data from the Central Bank of Kenya (CBK), credit to the private sector jumped 9.1 percent in the year to February compared to 8.6 percent in December. However, these figures are below the ideal growth level of between 12 and 15 percent needed to accelerate economic development.
Dozens of microlenders have invested in Kenya’s credit market in response to the growth in demand for quick loans, where borrowers can get loans in minutes via their mobile phones rivaling commercial banks.
Tala recently raised Sh16.1 billion ($145 million) for onward lending and expansion in its key four markets including Kenya, heightening competition in the popular mobile loans segment which has also become profitable for commercial banks.
While announcing the long-term funding, Tala which also operates in Mexico, the Philippines, and India said the fresh funding would enable them lend to borrowers at longer tenors and launch new products.
The microlenders have however faced a clamour for regulation amid criticism they have saddled borrowers with high interest rates, which rise up to 520 percent when annualized. The sky-high interest rates have led to widespread defaults and an ever ballooning number of defaulters who have been adversely listed with credit reference bureaus (CRBs).
Tala and Branch, some of the top players in the mobile digital lending market, offer annualised interest rates of 84-152.4 percent and 156-348 percent respectively.
Market leader M-Shwari, Kenya’s first mobile-based savings and loans product and which was launched by Safaricom and NCBA in 2012, charges a “facilitation fee” of 7.5 percent on credit regardless of its duration, pushing its annualised loan rate to 90 percent.
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