Airtel offers loans over the phone
Diana Ngila | NATION
Airtel Kenya managing director Shivan Bhargava (right) with Faulu Kenya boss John Mwara during the Kopa Chapaa launch at a Nairobi hotel on May 3, 2012.
What you need to know:
- Subscribers can access upto Sh10,000 payable in 10 to 30 days as mobile provider seeks to boost its revenues
Airtel customers can now access loans of up to Sh10,000 over the phone after the firm turned to short term lending to boost its revenues.
The mobile phone company will be offering the loans through a partnership with micro-finance lender Faulu Kenya.
The service dubbed “Kopa Chapaa” will allow its subscribers to get loans of between Sh100 and Sh10,000 at an interest rate of between three and 10 per cent.
The loans are repayable in 10 to 30 days. Until now, mobile subscribers were only able to access airtime on credit and the new offer will now step up competition with its main rival, Safaricom’s M-Pesa.
To get the loan, subscribers must be registered on its mobile money transfer service — Airtel Money — and must be active users with a good history.
“More than 60 per cent of our subscribers are registered with our mobile money service. We have been piloting the service with about 300 people and through building our subscribers’ credit history, we will eventually increase the loan ceiling to Sh70,000,” said Airtel Kenya managing director Shivan Bhargava.
The loan amounts and its partnership with the micro-finance institution indicate that the service is targeted at the low end market.
Faulu and Airtel are counting on the credit reference bureau to help profile risky borrowers.
But its lack of security may prove a litmus test given that apart from listing the defaulters with the credit reference bureaus, it will be difficult to force defaulters to pay given the small amounts involved.
To apply for a loan, customers will dial *305# and follow the menu, which will prompt them to quote the amounts they want and send a message.
After that, an SMS will be sent back, telling the applicants whether or not they qualify and how much they will be given as well as when they are required to repay.
Faulu Kenya’s managing director John Mwara said the two firms will be sharing revenues from transactions and interest equally to begin with.
The two are targeting to transact an average of Sh4 billion a day.
