The City Bank has launched the country's first collateral-free "Digital Nano Loan" service, allowing bKash users to receive instant loans ranging from Tk500 to Tk20,000 through their mobile bKash app.
"A customer can repay a loan in three equal monthly instalments (EMIs) from their bKash accounts. The interest rate will be 9% per annum," said Mashrur Arefin, managing director and chief executive officer of The City Bank, at the launching ceremony of the service.
"The service involves daily calculation and processing, which means a borrower will bear interest only for the days the loan was outstanding. As a launch offer, we will not charge any loan processing fee till further announcement," he said.
"Mobile Financial Service (MFS) companies are taking deposits and making money transfers digitally for the mass population. It was never about giving loans to the masses. Hence, there has always been this ethically wrong approach towards financial inclusion, which finally sees itself resolved with this launch of Digital Nano Loan," he added.
Urging the central bank to raise the loan limit up to Tk5 lakh, State Minister for ICT Zunaid Ahmed Palak said, "As the government is planning to set a gig economy by 2041, we need more data-driven business. As retail banking is the reality now, the government is also committed to promoting the Small and Medium Enterprises (SME) sector, where such retail banking will play a vital role."
Bangladesh Bank Deputy Governor Abu Farah Md Nasser said, "Only the agent and school banking deposits are amounting to almost Tk5,000 crore. But these marginalised people don't get enough lending from banks. We have already set an agenda to lend at least 25% of the total loan to the SME sector within 2024. From this point of view, this product will accelerate financial inclusion."
Aziz Al Kaiser, chairman of The City Bank, said, "Customers need not have a bank account to take this loan. They will be able to receive and repay their loans by their bKash accounts. No collateral will be required for this loan. So this will help the business sector grow."
bKash CEO Kamal Quadir said, "Banks can design more creative and inclusive services through digital platforms leveraging like bKash. This initiative further validates the complementing arrangement that banks and bKash developed over the years through cooperation and confidence in each other. The Digital Nano Loan will broaden the scope of financial inclusion."
How to get Nano Loan
To avail of this Digital Nano Loan, bKash users will need to click on the "Loan" icon on the app and enter the desired loan amount within the limit approved by The City Bank, as well as accept the terms and conditions.
After entering the bKash PIN, the loan amount will be instantly disbursed into the user's bKash account. To repay the loan, three EMIs will be required from the same account.
Earlier in July 2020, the service was launched on a pilot basis with the approval of the Bangladesh Bank and aims to expand access to finance to unbanked populations and contribute towards the journey of financial inclusion, with the strong technology support role played by bKash and its strategic partner, Ant Group, a leading technology company.