Safaricom has issued a clarification explaining why M-Shwari is legally allowed to recover defaulted loans using funds held in a customer’s M-Shwari savings account.
The clarification follows widespread complaints from Kenyans who reported that their M-Shwari savings were locked or unexpectedly deducted, raising public concern and debate on social media.
According to Safaricom and its banking partner NCBA Bank, these recoveries are not arbitrary but are fully backed by the terms and conditions governing the M-Shwari service.
What Is M-Shwari?
M-Shwari is a mobile banking product offered by Safaricom in partnership with NCBA Bank, allowing users to:
- Save money via their M-Pesa line
- Access instant mobile loans
- Build a credit profile
- Earn interest on savings
Because it is a regulated banking product, all deposits and loans are governed by formal banking rules, not just mobile money policies.
Why M-Shwari Can Deduct Money from Savings
Safaricom clarified that when a customer defaults on an M-Shwari loan, NCBA Bank has the right to recover the outstanding amount from funds held in the customer’s M-Shwari deposit account.
This is based on a legal principle known as “right of set-off and lien.”
What This Means in Simple Terms
If you:
- Took an M-Shwari loan
- Failed to repay it on time
- Have money sitting in your M-Shwari savings
➡️ The bank can automatically use that money to offset (pay) the unpaid loan.
Is This Legal?
Yes. According to Safaricom and NCBA:
- Customers agree to these terms during registration
- The clauses are contained in the M-Shwari Terms and Conditions
- NCBA Bank is regulated by the Central Bank of Kenya (CBK)
This means the action is contractual, not a system error or unauthorized access to customer funds.
Why Some Accounts Were Locked Instead of Deducted
In some cases, customers reported that their M-Shwari savings accounts were locked instead of being immediately deducted.
Safaricom explained that:
- Locks occur when there is an unresolved loan default
- The lock prevents withdrawal until the loan issue is addressed
- It protects the bank from further risk while recovery processes are underway
Once the outstanding loan is cleared, normal access is restored.
Common Scenarios That Trigger Recovery
Your M-Shwari savings may be affected if:
- You defaulted on an M-Shwari loan years ago
- You ignored repayment reminders
- You assumed an old loan was “forgotten.”
- You changed SIM cards but kept the same ID
- You tried saving before clearing outstanding debt
💡 Loans are tied to your ID, not just your SIM card.
How to Check If You Owe an M-Shwari Loan
To avoid surprises, users are advised to:
- Dial *234#
- Select Loans and Savings
- Choose M-Shwari
- Check:
- Outstanding loan balance
- Loan status
- Repayment history
Alternatively, use the M-Pesa app.
What to Do If Your Savings Were Deducted or Locked
If affected, Safaricom advises customers to:
- Confirm the outstanding loan amount
- Clear the loan balance
- Contact Safaricom Customer Care or NCBA Bank for clarification
Once repayment is completed, access to savings should be restored.
Public Reaction and Consumer Concerns
The clarification has sparked mixed reactions:
Supporters argue:
- Loan agreements must be honored
- Savings should not coexist with unpaid debt
Critics argue:
- Customers need clearer reminders
- Loan recovery should be more transparent
- Some users forgot about old loans
The issue has renewed calls for better financial literacy and clearer mobile banking disclosures.
Final Word
Safaricom’s clarification on M-Shwari can deduct money confirms that M-Shwari operates like a real bank account, not a simple wallet. While the deductions may feel sudden, they are grounded in agreed-upon banking terms.
For customers, the lesson is simple:
👉 Always repay your mobile loans on time—or your savings may do it for you.
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