The Pay Day Loan has been designed to assist salaried employees to access unsecured, short term cash advance until their next pay day. The loan can be used for emergencies, travel, medical expenses, pay for utility bills, luxury, etc
The product is designed to offer a quality service at a profit, foster goodwill and provide a convenient platform to access emergency and quick financial assistance from the Bank. The product is further aimed at assisting the middle to low income salaried individuals. It is expected that in having assisted this sector, the Bank will have established a long term relationship and built loyalty with its customers.
The purpose of the loan is not specific and caters for various needs such as travel, medical, fees etc so long as it is legal in nature and has to be disclosed on the application form for bank records.
The pay day loan will be available to the following:
- Resident Malawian nationals with definite potential to service the loans and whose regular monthly income is paid direct into the Bank account maintained at National Bank.
- Foreign nationals with a Permanent Residence who have a definite potential to service the loans.
- Foreign Nationals with a Temporary Employment Permit (TEP) and do not remit 2/3 of their monthly earnings.
- Professionals who are paid a confirmed recorded share of the firm’s earnings on a monthly basis.
- Professional business people who get a regular confirmed recorded monthly income from the business
The facility shall be repayable on the next pay date through a bullet payment. However customers will have an option for early redemption of the loan without any penalty. Customers shall be allowed to borrow again immediately after settling the existing loan.
TERMS AND CONDITIONS
i) Minimum Amount – MK30, 000.00
ii) Maximum Amount – MK750, 000.00
The amount shall not exceed 50% of the regular monthly income deposited into the bank account.
There must be evidence of continuous deposit of salary to the account over the past six months.
- The facilities shall be extended to holders of Current, Savings and Special Savers accounts whose salaries have been consistently been remitted to their bank accounts over three months.
- New account holders will be eligible for the facility provided their applications are supported by a Letter of Undertaking from their employees to remit salaries to their accounts.
- Qualifying employees shall be those that have been confirmed in their employment as evidenced through a Letter of introduction.
- Customers will not be allowed to convert the pay day loan into an overdraft facility.
- Due to the short term nature of the facility and to make it distinct and attractive we will only require a Letter of introduction from the employer.
- Evidence of consistent remittance of salary to the customer’s account.
- No appraisal fees or commissions shall be recovered but draw-down of the facility shall only be allowed upon acceptance of the sanction letter by the customer.
- The facility shall be charged varying interest rates and offered in varying loan bundles and payable in pre-determined balances at the end of each month. Refer to appendix 2.
- The cost of processing the facility shall be incorporated in the balance payable hence no recovery of appraisal fees or commissions.
APPLICATION AND APPROVAL PROCESS
- Customers shall complete and submit loan application forms with:
- A copy of the customer’s pay slip which is not more than one month old.
- A utility bill in the name of the applicant which is not more than 2 months old.
- Copy of the employment contract if in contract employment (facility tenor to be aligned to 2 months before contract expiry).
- Employer's Letter of Introduction
- On receipt of these documents, the customer’s application shall then be assessed by the consultant and scored using the Credit Scoring scale in line with the consumer finance scheme.
- This is a pre-approved facility and the ARM shall vet and jointly process applications with the Service Centre Manager. In the Centres where there is no ARM the Consultant shall jointly vet and process the facility with the Service Centre Manager.
- A monthly return shall be submitted to Credit Management Division with a copy to the Head, Personal and Business Banking Division.
DRAW-DOWN OF FACILITY
Once a facility is approved the signed credit application shall be used to effect draw-down of the facility.
The Account Relationship Manager is accountable for monitoring the performance of customer's loan account and its conduct with the Bank in line with the Bank’s policy and procedures.
HANDLING OF NON-PERFORMING DEBTS
In line with the procedures as per the consumer finance scheme.
PRODUCT PROFILE REVIEW
This product profile is subject to review every three years or when circumstances demand so.
PRODUCT PROFILE APPROVAL
Approval is by the Credit Committee.