Salary advances increased by 86 per cent of the Sh105.7 billion e-credit from Co-operative Bank in nine months ending September this year.
According to the lender, the advance borrowings, mostly to meet short-term needs grew 28 per cent from Sh34.4 billion in a similar period last year.
Via M-Co-op Cash, the borrowing pushed its total digital lending to Sh173.5 billion at the end of September from Sh105.7 billion in September 2020.
The salary advance product, which Co-op Bank calls e-flexi, means salaried workers were tapping Sh5.7 billion monthly in the period, as 1.42 million customers were added to reach 6.06 million.
E-credit is consumer-based, that is on salary check-off deductions at source and therefore lower credit risk.
Co-op Bank charges a processing fee of eight per cent on the amount of salary advance.
Additionally, customers pay 20 per cent excise duty of the processing fee and an insurance fee of 0.034 per cent of the loan value.
Customer applying for a Sh100,000 salary advance incurs Sh8,000 processing fee, Sh1,600 excise duty and Sh34 insurance fees, and receives Sh90,366.
Customers are allowed to borrow from Sh3,000 and processing is done instantly. The amount is recovered within one to three months.