Stanchart launches salary advance service

GOTHATAONE MOENG
Staff Writer | Tuesday July 12, 2011 00:00

 

The service allows the bank's  signed up current account holders to withdraw money from their account before their salaries are paid. Speaking at a media launch of the service yesterday morning, Michael Wiegand, acting CEO and Head of Consumer Banking, said that the service would be a 'huge advantage for when people need emergency cash'.

Customers will be allowed to withdraw up to 70 percent of their salaries before they are paid, and will be charged 2.25 percent of the money they withdraw.  Signing up for the service is free, and after signing up the service is always available through the ATM, mobile and Internet banking, debit card or cheque.

 Speaking at the launch,  Wiegand denied that their service would lead customers to more debt, saying that the bank wants to ensure that customers are not overly burdened and over-indebted.  He said the customer would never have any outstanding debts from using the service, as the advance will be paid back as soon as salaries are paid.

He also denied that the salary advance service operated like a micro-lender, saying their service is much cheaper and charges no interest. 'It's not a loan, it's an opportunity for people to have access to their salaries before they get paid,' he said.

The service comes at a time when there are grave concerns about the level of indebtedness by households in the country. According  to statistics from the Bank of Botswana households owe commercial banks P12.9 billion as at April 2011. It also comes at a time when there are fears of some civil servants being caught up in a debt trap after having been not paid for two months following the government's No Work No Pay policy applied during the  recent public service strike.

Bank of Botswana statistics also reveal that by December 2010, about one in 10 loans from commercial banks to households was in arrears. Of the P12.9 billion owed to banks, P1.5 billion was in arrears, ranging from three-months-old to specific provisions.