Nairobi — Safaricom has slashed interest rates on Fuliza loans below Sh1000 by 40 per cent and introduced a three-day grace period for borrowers.

The new rates, effective October 1, will see customers borrowing Sh500-1000 pay a daily interest charge of Sh6 down from Sh10.

Further, those borrowing loans of between Sh101-499 will attract a Sh3 daily charge down from Sh5.

In the new tariffs, users borrowing Sh1001-1500 will pay a charge of Sh18, a 10 per cent discount from Sh20 while those who will borrow Sh1500-2500 will in effect pay Sh20, down from Sh25, reflecting a 20 per cent discount.

Those who seek to draw Sh2500-70,000 will also enjoy a 16.7 per cent discount, to pay a daily charge of Sh25 down from Sh30.

Despite the new rates, the telco together with its partner banks KCB and NCBA has retained the 1 per cent access fee on all borrowings.

All customers who already hold a Fuliza loan by the start of the new charges will continue paying their loan using the old tariffs.

The new tariffs will start once a user has fully settled their debt.

For those with no outstanding debt, the new rates will apply immediately.

Fuliza overdraft facility introduced in 2019 and underwritten by NCBA Group and KCB Group allows customers to meet essential needs such as shopping, rent, or paying for goods and services on the mobile money service, M-Pesa.

The short term loan facility has become a preference for many, disbursing Sh1.6 billion daily.

Despite its popularity, a recent study by consultancy group Deloitte and data company DataEQ found out that a majority of M-Pesa users regret signing up on Fuliza.

Others noted that their limits were so low thus hindering them from accessing more funds questioning Safaricom for charging them higher values on short-term loans.