Auction, Police Arrest & Other Myths Related To M-Shwari Loan Default
Launched in 2013 through a partnership between Safaricom and NCBA, M-Shwari has proven to be a juggernaut in the Kenyan mobile financial landscape alongside its counterpart M-PESA.
With both products being the brainchild of Safaricom PLC, M-PESA operates as a mobile money transfer service while M-Shwari serves as both a savings and credit platform whereby subscribers can access loan limits dependent on one’s savings frequency via the same platform.
However, qualification for an M-Shwari loan requires a prior 6-month active M-PESA subscription, frequent savings to M-Shwari in addition to active usage of Safaricom products such as voice and data which collectively determine your initial loan limit.
With this loan limit ranging anywhere from Ksh100 – Ksh50,000, you can therefore proceed to apply for the loan using any of the available platforms which include; USSD Code, SIM toolkit or via the M-PESA App.
Approved M-Shwari loans are charged at 9% facilitation fee and are to be repaid within a 30-day period from the disbursement date.
Failure to repay the loan within this duration attracts an additional 9% facilitation fee on the outstanding balance plus a further 30-day extension.
Nonetheless, non-repayment after the lapse of this extension period directly results to a DEFAULT.
Although defaulting on your M-Shwari loan can negatively impact your credit score, there are other false consequences aimed at promoting fear and anxiety to M-Shwari loan defaulters and they include;
1. Police Arrest
According to the Kenyan law, defaulting on a loan is not a criminal offense and as such does not warrant being placed into custody by police.
2. Auction
An auction refers to the public sale of goods/property via competitive bidding whereby the bids can either be higher/lower than the market value of the item being sold.
Most auctions occur when borrowers default on secured loans whereby they provide a collateral/security in exchange for a loan. It is upon default that this security is put up for auction by the lender to recover any outstanding balance.
When it comes to the issue of M-Shwari, it is an unsecured loan whose default cannot legally warrant the auctioning of the defaulter’s property.
3. Deduction From M-PESA
As previously highlighted, M-Shwari and M-PESA are different platforms serving different purposes and as such, repayment cannot be implemented through unauthorized deduction from your M-PESA account.
However, funds available in your M-Shwari savings account equivalent to the outstanding balance may be ‘locked’ and inaccessible to you until full repayment is done.
4. Denial/Reduction Of Fuliza
Access to Fuliza being an overdraft facility also offered by Safaricom, may not be dependent on your M-Shwari loan status in terms of denial/reduction of loan limit.
However, your previously assigned Fuliza limit may remain stagnant for a prolonged duration unless your M-Shwari outstanding balance is settled.
5. Debt Shaming ( Calling/SMS Phonebook Contacts)
Debt shaming refers to the intentional breach of a borrower’s privacy by publicly causing embarrassment for defaulting on a loan. Some of the debt shaming technique involves calling your phonebook contacts to force repayment.
M-Shwari being offered by a lender who is governed by the Digital Credit Provider Regulations which terms debt shaming as illegal does not call your contacts.
6. Harassment
Harassment refers to a behaviour aimed at causing distress either through physical or emotional abuse through threats, intimidation, verbal abuse, continuous unwarranted communication etc
