A few weeks after the EcoCashLoans launch, a lot of people still have some questions on how the service really works. On their part, both Econet Services and Steward Bank have surprisingly done relatively very little to publicise their new product and hence a lot has been left to speculation and trial and error.
We contacted Steward Bank to get details on some specifics on how the EcoCashLoans work. For example, some don’t know how to repay the loans or what happens in the event that you fail to repay the loans.
Here’s part of the question and answer email chat with a Steward Bank official:
1.How do borrowers repay the loans?
The loan repayment process is simple and straightforward. A borrower must load value into their wallet either through a cash-in at an EcoCash Agent or a funds transfer from another subscriber. Thereafter, the borrower simply transfers the repayment from their wallet to the loan repayment module. All this is done through the phone/ handset using the user-friendly EcoCash menu.
2. Is the 5% admin fee deducted from the loan upon application or does the borrower have to add 5% on repayment?
The 5% handling fee is deducted from approved amounts e.g if $100 is the approved loan amount, $5 will be deducted, leaving the customer with available amount of $95.
3. What is the lead time on loans? Is there any human involvement that on loan approvals or the system in all automated? I ask this because I tried to apply but the system just ended the program without any confirmation. Maybe it’s a network problem?
Under normal circumstances, the loan amount verification and approval process is instant. However, there may be delays either due to high demand placing greater pressure on the system or due to network challenges. The entire process is fully automated and there is no human involvement or manual intervention. We experienced a technical challenge on the first two days after launch which resulted in approval messages not being delivered, and in some cases customers receiving error messages. This technical challenge has since been resolved.
4. How have you protected yourselves against defaults? Most banks are faced with a lot of non-performing loans and how will Stewart Bank recover funds from defaulters.
We believe that we have created a robust credit scoring system that minimises the risk of default. The world over the default rate on micro loans is much lower than the market average. Nonetheless, the bank will resort to traditional recourse methods for recovering from delinquent borrowers. This probably means errant borrowers will be handed over to collection agencies like debt collectors and lawyers.
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