City Bank and bKash yesterday launched "Pay Later", a collateral-free digital nano loan that facilitates payments even if customers do not have sufficient balance in their virtual wallet in the mobile financial service provider's app.

Subject to eligibility, customers can instantly borrow Tk 500 to Tk 30,000 to directly buy a product or service. No interest will be imposed if the loan is repaid within seven days.

To avail the loan, customers need to scan the merchant QR code or input the merchant number, insert the amount and select the "Pay Later" option in the bKash app.

Customers then have to select between interest-free repayment within seven days and repayment in six months.

For the interest-free option, if a customer fails to make the payment within the seven days, the amount will be converted into a three-month loan with a 9 percent interest per annum.

In the case of the six-month repayment option, customers need to pay 20 percent of the total amount up front.

The remaining 80 percent will be divided into equal instalments, to be paid deducted automatically on a specified date of every month. The interest rate will be 9 percent per annum.

In both cases, a processing fee of 0.575 percent, including VAT, will be applicable.

The customer's loan eligibility and loan amount are determined through an automatic credit assessment system based on the customer's transactions through their bKash account and City Bank's credit risk management policy.

As per the central bank's directive, only bKash customers who have completed e-KYC (electronic Know Your Customer) through biometric system, are considered eligible for this loan.

The e-KYC is an automated process through which companies can perform customer identity verification digitally.

Mashrur Arefin, managing director and chief executive officer (CEO) of City Bank, and Kamal Quadir, CEO of bKash, launched the service at the private commercial bank's head office in Dhaka.

"…we can provide loans to more customers. More importantly, we can now provide banking facilities to marginal customers in rural areas where we do not have any branches or agent points," said Arefin.

bKash has made bank loans accessible for the unbanked, helping to develop an effective ecosystem for cashless transactions, said Quadir.