BPR raises unsecured loans limit, extends mortgage repayment period

Xavier Shema Mugisha, Chief Business Officer at Banque Populaire du Rwanda. / Photo: Courtesy.

Banque Populaire du Rwanda (BPR) Plc is seeking to ease its credit access terms and has since reviewed key lending conditions.

The bank has adjusted its unsecured loans up to Rwf 15M from Rwf 6M previously a move that the bank says is in response to consumer demands and market trends.

 

The bank said that the previous unsecured loan limit of Rwf 6M often limited consumers’ options in acquisition of assets or use of the loans.

 

For instance, for clients borrowing to acquire assets such as land or a vehicle, the previous amount limited options of what one would acquire.

 

With the review of the amount, the bank has revised the repayment period of the unsecured loans from 4 years to 5 years to allow flexibility in repayment.

The bank has also improved flexibility in amounts clients can seek in unsecured loans. Previously, the minimum amount of the loan was Rwf 1 million while the maximum was an equivalent of 12 times one’s monthly net salary. Under the new regime, clients can apply for unsecured loans for as low as  Rwf 300,000 while the maximum will depend on repayment capacity.

Going forward, monthly repayments will not exceed 50 per cent of the customer’s net monthly salary but exceptions to increase the monthly repayment above 50 per cent will be considered for clients with an additional source of income.  

The bank also considered potential homeowners the lender has increased the tenure from 20 years to 25 years to become among lenders with the longest repayment period.

Xavier Shema Mugisha, the bank’s Chief Business Officer said that by extending the tenure to 25 years for mortgage repayment, the lender is seeking to improve chances of homeownership for its clients after identifying tenure as a challenge.

Mugisha said that with a majority of Rwandan’s salaries ranging between Rwf300,000 to Rwf 800,000, shorter tenures often limit potential homeowners chances of owning a property. With a longer tenure, clients have more options of properties they can own as it reduces amounts paid monthly and widens the options of homes they can own.

The adjustment has also created a provision to finance up to 100 per cent of the lower of market value and sales price which incentives affordable housing subsector  and up to 80 per cent for others.

Mugisha said that for clients looking to own vehicles, terms have been improved to make them more practical and convenient. The bank has reviewed the maximum age of the vehicle to be financed to 10 years from the date of manufacture from the previous 6 years on the realization that it was restricting car owners. On average, cars imported into the country are about 7 years old.

He added that the maximum repayment period for used cars was increased to 5 years from 4 years.

Previously, the minimum amount of the vehicle loan was Rwf 4 million with a maximum amount of Rwf 35 which has since been adjusted to a minimum amount of  Rwf 2 million while the  maximum will depend on repayment capacity of a client.

The adjustments which is expected to increase the number of eligible clients to credit as well as improve credit terms will also see a reduction in the time taken to process and disburse loans. For instance, mortgages will be disbursed within two weeks of application if all requirements are met while personal loans will be automated for disbursal in less than 4 days if all conditions are met.

Mugisha said that they are confident that the eased terms will not in any way drive up bad debt or non-performing loans as there are measures to ensure due diligence as well as improved efficiency of the Credit Reference Bureau availing quality of data for decision making.

cmwai@newtimesrwanda.com

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