Salary advances are usually popular because they do not involve paperwork, guarantors or security for as long as one has an active salary account.
Co-operative Bank of Kenya salary advance grew by Sh59.91 billion to an average of Sh164 million daily last year.
The bank disclosed that salary advances, issued under its product dubbed, e-flexi, is a rise from Sh138 million in 2020.
This prompted Co-op’s total digital lending hit Sh192.7 billion at the end of December 2021 from Sh122.2 billion in December 2020.
Data shows MCo-op customers jumped by 1.94 million to hit 6.58 million, meaning that the lender has since the onset of the pandemic in March 2020 added 3.42 million e-credit customers.
This is more than the Sh2.89 million the bank had added in five years to 2019 and highlights the growing popularity of salary advances.
The jump in workers seeking short-term credit through digital apps to plug gaps in their expenditure has partly been on the back of economic difficulties brought about by the Covid-19 pandemic.
Co-op Bank charges a processing fee of 8 per cent on the amount of salary advance. In addition, customers pay 20 per cent excise duty on the processing fee and an insurance fee of 0.034 per cent of the loan value.
Customers are allowed to borrow as from Sh3, 000, with processing done instantly. The amount is recovered within one to three months.
