Bangladesh has entered the era of digital loan through a joint initiative of the country’s largest mobile financial services (MFS) provider bKash and leading private commercial bank City Bank. The ‘digital nano loan’ was commercially launched on bKash’s platform in 2021 after piloting it for one year under the supervision of Bangladesh Bank. Since then, bKash customers have taken more than Tk 7.0 billion worth of ‘nano loan’ from City Bank using the bKash app. Such loan product was launched as part of a joint initiative of bKash and City Bank as part of enhancing the digital transaction ecosystem in the country. Till now, over 245,000 bKash customers have availed this collateral-free ‘nano loan’ for 0.7 million times. Many of these customers have taken this hassle-free, instant and affordable loan multiple times.
The main objective of launching this digital loan is to accelerate financial inclusion of the country’s underprivileged population, especially women and people living in rural areas by ensuring their access to credit. As of 2023, 24 percent of these customers are women and 55 percent of the total borrowers live in rural areas.
As per the central bank’s directives, bKash customers who have completed e-KYC through biometric system and using bKash app, are considered eligible for this loan from City Bank. Based on the customer’s transaction in bKash account and City Bank’s credit risk management policy, the customer’s loan eligibility and loan amount are determined through an automatic credit assessment system.
The eligible customers can instantly get the ‘nano loan’ ranging from Tk 500 to Tk 20,000 from the City Bank with just few taps. To avail this loan, customers don’t need to go to any office or sign any document, they don’t even need nominee or guarantor for the loan. The validity of this loan is maximum of three months and with the help of technology, interest rate is determined on daily basis.
About the loan product, City Bank’s Head of Retail Banking Arup Haider said, “Through traditional method, we managed to disburse just 0.3 million loans in 15 years, whereas, the nano loan count reached 0.7 million in less than two years. It is a matter of great joy and pride for us.”
Meanwhile, Ali Ahmmed, Chief Commercial Officer (CCO) of bKash said, “City Bank’s collateral-free loan, which can be taken and repayable through the bKash app, is a revolutionary addition to the scenario of financial inclusion in the country. As a result, a large number of unbanked people have gained the eligibility to digitally access credit facility, giving them more freedom and ability in daily financial transactions. Though the limit of the loan is just Tk 20,000, we are working to gradually raise ceiling of the loan in near future”.
Process of taking the loan and repaying it through bKash app:
Firstly, the customers need to check whether they are eligible for the ‘nano loan’. The eligible customers can see the amount of loan they can avail by tapping on the ‘Loan’ icon in the bKash app. In the next step, a customer need to enter the desired loan amount within the approved limit by the City Bank and agree to the terms and conditions. After that, a customer will get the loan instantly in the bKash account by entering bKash PIN. The loan is repayable in three equal monthly installments. The loan installments will be automatically deducted from the bKash account on due date. However, the borrower can also repay the loan even before repayment date and in that case, the interest would be charged only for those days. Besides, there is no additional cost for early settlement of the loan.
