Co-operative Bank Launches New Loan Facility Dubbed Kamilisha to Rival Fuliza, Equity’s Boostika

• The Co-operative Bank of Kenya launched a new overdraft credit facility dubbed Kamilisha to enable customers with insufficient funds to complete transactions
• This places Co-op Bank in direct rivalry with Equity Bank’s Boostika service and Safaricom’s Fuliza service
• The loan will be subject to a 20% excise tax on the access costs and a daily maintenance fee of 0.2% on the outstanding balance

TUKO.co.ke journalist Japhet Ruto has over eight years of experience in financial, business, and technology reporting, offering insights into Kenyan and global economic trends.

The Co-operative Bank of Kenya has increased the competition for Equity Bank Kenya and Safaricom by introducing an unsecured digital overdraft facility.

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The new loan facility enables users to overdraw their accounts by up to KSh 100,000 to complete transactions such as paying bills.

What is Co-op Bank’s Kamilisha?

The lender informed customers that the new short-term credit facility is dubbed Kamilisha.

In a statement, Co-op Bank said the service will allow individuals and businesses to make purchases when they do not have enough money to pay for things like rent, power, stocks, or money transfers.

“When there are insufficient funds in your bank account, you can still execute transactions by using the overdraft service. It enables you to complete important transactions by filling the gap between what you have and what you must pay,” the financial institution explained.

Which loan facilities will Kamilisha rival?

The move puts Co-op Bank in direct competition with the Boostika service from Equity Bank and the Fuliza service from Safaricom, both of which provide short-term digital credit with maximum limits of KSh 100,000 and KSh 70,000, respectively.

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Kamilisha has a monthly credit life insurance premium of 0.034%, a daily maintenance fee of 0.2% on the outstanding balance, and a one-time access fee of 2% on the borrowed amount.

The loan will also be subject to a 20% excise tax on the access costs.

As per the charges, a customer who taps a KSh 1,000 overdraft will incur KSh 20 in access costs, KSh 4 in excise tax, a KSh 0.34 insurance fee, and a daily fee of KSh 2, for a total of KSh 60, if the full amount is not paid that month.

The total would be approximately KSh 84.34, which translates to a monthly effective cost of credit of almost 8.43%.

What are Fuliza and Boostika charges?

Currently, the monthly cost of Equity’s KSh 1,000 Boostika loan is KSh 85, which includes a 5% processing fee, 1% insurance, and 20% processing fee excise duty.

Fuliza, on the other hand, charges KSh 6 per day on a KSh 1,000 loan, which comes to KSh 180 a month.

Co-op Bank’s Kamilisha loan also has a one-month repayment period.

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Which loan products did Safaricom unveil?

In other news, Safaricom introduced three new loan products to its 50 million customers in Kenya.

The products are Taasi Pochi, Taasi Till, and Fuliza Biashara. Taasi Till offers short-term loans ranging from KSh 1,500 to KSh 250,000.

Fuliza Biashara allows Lipa na M-Pesa merchants to take out several overdrafts, with a minimum of KSh 1,000 and a maximum of KSh 400,000, depending on their authorised limit.

Proofreading by Jackson Otukho, copy editor at TUKO.co.ke.

Source: TUKO.co.ke