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Njoroge said the lenders are only expected to comply with Section 33B of the Banking Act even as the effects of the repealing of the rates cap takes effect/FILE

Finance

CBK partners with five banks to support SMEs

The customers will access the loans through their mobile phones after being scored and advised of their credit limit which should be paid in a period of 1-12 months at an interest of 9 per cent per annum/FILE

NAIROBI, Kenya, May 21 – Central Bank of Kenya has partnered with five commercial banks to introduce a loan application app that will support the Micro-Small and Medium Scale Enterprises.

Commercial Bank of Africa, the Cooperative Bank of Kenya, Diamond Trust Bank Kenya Limited, KCB Bank Limited and NIC Group are the banks steering the agenda to ensure their customers access loans as guided.

Dubbed Stawi, the micro-small and medium enterprises will be allowed to access loans ranging from Sh30,000 to Sh250,000.

The customers will access the loans through their mobile phones after being scored and advised of their credit limit which should be paid in a period of 1-12 months at an interest of 9 per cent per annum.

The clients who also manage to pay 80 per cent of the loan borrowed within a track record of three months repayment will also get a cash reward.

The pilot phase of the project will be done in a period of two weeks and will involve 3,500 traders under the sector.

The second roll will involve 10,000 traders who will be registered by Stawi agents during the second round of tests for the app.

Speaking during the launch of Stiwa at Gikomba market, Central Bank of Kenya Governor Patrick Njoroge said the facility responds to the unique financing needs of Micro-Small and Medium Enterprises.

“This sector is one of the great contributors towards the country’s economy and the product could not have been launched at a more opportune time. The sector has experienced challenges for quite a while but now the script has changed,” the CBK Governor said.

“We are excited to work with the five banks to minimize the complexity of developing new and more accessible loan offerings as they bring much-needed capital to this underserved yet vital segment of the market,” he added.

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In March 2019, borrowers escaped a rise in the cost of loans after CBK retained its benchmark at 9.0 per cent.

This was greatly attributed by an increase in the number of defaults which reduced appetite for lending to individuals and small enterprises by commercial banks.

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