Your bank loan deductions will be higher due to your mobile money loan.

Bank Loan Deductions

Your bank loan deductions will be higher due to your mobile money loan.

Bank Loan Deductions: Defaulting on your mobile money loan may make the interest you pay on a bank’s loan be higher than others’ interest, or it will be higher than what you should have paid.


Mobile money loan is a loan taken through the platforms of telecommunication service providers.


The loans are actually provided by financial institutions like banks, savings and loan companies and microfinance companies through the telcos.


The telcos operate electronic money under the supervision and guidance of the central bank. For several reasons, the telcos have been prevented from giving out loans and prevented from offering investment services.


However, financial institutions like banks can give out loans and offer investment services using the platforms of the telecommunication service providers.


Report to credit bureaus

Therefore, any mobile money loan taken is actually a loan taken from a financial institution.


Financial institutions are tasked to provide loan status of every customer to credit bureaus in the country.


The credit bureaus serve as a central point where all loan customers, irrespective of the financial institution involved, have their loan history documented.


Customers who have loan default status are considered higher risk individuals than customers who do not have any default status.


Customers with default status are given higher interest rates to pay on the same loan amount compared to non-defaulters.


Also, financial institutions get to avoid serving customers with huge default rates.


This measure is intended to achieve four main goals.

1. Defaulters are forced to remit much of the loan within a shorter period before they default.
2. Customers avoid defaulting to avoid future implications.
3. Financial institutions avoid losing funds through bad loans
4. Non-defaulters get to access loans at lower rates and do not pay for defaulters


Reporting mobile money loan defaulters

Financial institutions which provide loans to customers through telcos are also obliged to report the loan status of every customer to the credit bureaus.


Bank Loan Deductions
Bank Loan Deductions

The report by the loan providers therefore implicates all mobile loan defaulters in the credit bureaus database.


The implication, therefore, is that mobile money loan defaulters are considered as high-risked individuals and would most likely be given higher interest rates (deductions) to pay than non-defaulters.

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