The Co-operative Bank of Kenya has rolled out a new digital overdraft service called Kamilisha, enabling customers to temporarily overdraw their accounts by up to Sh100,000 to meet pressing payment needs.
The product targets both individual account holders and businesses, particularly small enterprises, providing a financial cushion to complete essential transactions when funds are low.
This move positions Co-op Bank in direct competition with Safaricom’s Fuliza and Equity Bank’s Boostika, both of which dominate Kenya’s short-term digital credit market.
According to the bank, Kamilisha is designed to help customers settle urgent bills such as rent, utility fees, and stock purchases even if their accounts do not have sufficient funds.
“The overdraft service allows you to complete transactions when you don’t have enough money in your bank account. It bridges the shortfall between what you have and what you need to pay,” the bank said in a statement.
The service operates as a short-term loan with a maximum repayment period of 30 days from the date of first use. Any deposits made into the customer’s account are automatically applied to repay the borrowed amount.
Eligibility and the overdraft limit are determined based on account activity, including salary deposits, business turnover, and transaction history, allowing the bank to tailor credit limits to each user.
Kamilisha is part of Co-op Bank’s broader effort to expand its digital loan offerings, joining products like the Flexi Plus Salary Advance. This move reflects the growing trend of traditional banks stepping up to compete in Kenya’s fintech-driven lending space.
The new facility carries a monthly credit life insurance fee of 0.034 per cent, a daily maintenance fee of 0.2 per cent on the outstanding balance, and a one-time access charge of two per cent on the borrowed amount.
In addition, a 20 per cent excise tax applies to the access fee. For example, a customer borrowing Sh1,000 would incur Sh20 as an access charge, Sh4 as excise tax, Sh0.34 in insurance, and a daily fee of Sh2, bringing the total to Sh60 if the full amount is not repaid within the month.
The bank added: “When there are insufficient funds in your bank account, you can still execute transactions by using the overdraft service. It enables you to complete important transactions by filling the gap between what you have and what you must pay.”
Analysts note that Kamilisha’s launch introduces more choices for consumers and may drive competition, potentially leading to lower costs and improved terms in the digital credit market.
By providing a short-term financial buffer, Co-op Bank is helping customers manage cash flow gaps while reducing reliance on informal lenders.
With a maximum overdraft of Sh100,000, Kamilisha competes head-to-head with Equity Bank’s Boostika, which also allows up to Sh100,000, and Safaricom’s Fuliza, which caps at Sh70,000.
The slightly lower fees and structured repayment options make the new service an attractive alternative for users seeking reliable digital credit solutions.
