Overdraft loans (“OD Loans”) in Kenya are short-term credit facilities that allow customers to continue transacting even when their account balance reaches zero. These facilities are mainly used to pay for emergencies such as bills, school fees, medical expenses, fuel, food, and other urgent needs.
In Kenya, the most widely used overdraft is Fuliza, offered through M-PESA. However, several major banks also provide overdraft loan facilities to account holders.
This detailed guide covers the top overdraft loans in Kenya, their loan limits, fees, repayment durations, advantages, disadvantages, and a helpful FAQ section.
What Are Overdraft Loans in Kenya?
Overdraft loans allow you to spend more money than what is currently in your account. The bank or provider covers the deficit and you repay the borrowed amount plus interest or fees.
They are ideal for:
- Emergency payments
- Cash flow shortages
- Covering bills before salary
- Immediate financial needs
Top OD Loans (Overdraft Loans) in Kenya
Below are the most popular overdraft facilities available in Kenya:
1. Fuliza by M-PESA
Fuliza, offered through Safaricom, is Kenya’s most used overdraft service.
Loan Limits: KES 1 – KES 70,000 (varies per customer)
Fees:
- Daily access fee (charged once per day as per limit tier)
- 1% excise duty
Repayment: Automatically deducted from any incoming M-PESA funds
Availability: 24/7 via M-PESA
2. KCB Bank Overdraft Facility
The overdraft facility by KCB Bank Kenya allows customers to overdraw their current or salary accounts.
Loan Limits: Based on salary/income (KES 5,000 up to millions for corporate clients)
Interest: Approx. 13%–14% p.a. (charged on used amount only)
Tenure: 30 days renewable monthly
Features: Salary account holders get quick approval
3. Standard Chartered Bank Overdraft
The facility from Standard Chartered Kenya helps customers manage short-term cash emergencies.
Loan Limits: KES 10,000 – KES 1,000,000+
Interest: Approx. 13% p.a.
Repayment: Flexible, reviewed monthly
Notes: Requires a current account with regular income
4. Cooperative Bank Overdraft
Offered by Co-operative Bank of Kenya, this overdraft supports both individuals and businesses.
Loan Limits: From KES 5,000 upwards depending on account turnover
Interest: 13%–14% p.a. on amount used
Tenure: 1–12 months (renewable)
Extra Fees: Processing fee depending on limit
5. Family Bank Overdraft
The overdraft facility from Family Bank Kenya offers short-term borrowing against your salary or business income.
Loan Limits: KES 5,000 – KES 500,000+
Interest: ±14% p.a.
Tenure: 30 days, renewable
Highlights: Fast approval for salary account customers
6. I&M Bank Overdraft
Provided by I&M Bank Kenya, this facility enables customers to withdraw more than available funds.
Loan Limits: Negotiated based on account performance
Interest: 13%–14% p.a.
Repayment: Upon next deposit or as per agreement
Extras: Suitable for individuals and SMEs
Summary Table – Overdraft Loans Kenya (2025)
| Overdraft Provider | Loan Limits | Fees/Interest | Repayment Duration | Requirements |
|---|---|---|---|---|
| Fuliza (M-PESA) | 1 – 70,000 | Daily fee + 1% excise | Automatic, any deposit | M-PESA active usage |
| KCB Bank Overdraft | 5,000 – millions | ~13–14% p.a. | Monthly | Active KCB account |
| Standard Chartered OD | 10,000 – 1M+ | ~13% p.a. | Monthly | Salary/business account |
| Cooperative Bank OD | 5,000+ | ~13–14% p.a. | Monthly/annual | Co-op account |
| Family Bank OD | 5,000 – 500k | ~14% p.a. | 30 days | Salary/income account |
| I&M Bank OD | Negotiated | ~13–14% p.a. | Monthly | I&M Current account |
Pros & Cons of Overdraft Loans in Kenya
✔️ Pros
- Instant Access: Funds available immediately during emergencies.
- Flexible Repayment: Repay automatically when money enters the account.
- No Direct Application Needed: Once approved, you access funds anytime.
- Only Pay for What You Use: Charges apply on the actual overdraft amount, not the limit.
- Convenient: Perfect for short-term cash flow management.
❌ Cons
- Can Be Expensive: Daily fees or annual interest may add up if not cleared fast.
- Short-Term: Not suitable for long-term borrowing.
- Automatic Deductions: Can wipe your incoming funds immediately.
- Dependence Risk: Frequent users may rely on overdrafts as regular income.
FAQs – OD Loans Kenya (2025)
1. What is an overdraft loan?
An overdraft loan allows you to spend beyond your current account balance, offered by telcos or banks.
2. How do I qualify for an overdraft?
- Regular account activity
- Consistent income
- Good transaction history
- No negative credit record
3. How is interest charged on overdrafts?
Banks charge interest only on the amount you overdraw, not the entire limit. Fuliza charges daily usage fees.
4. Can I increase my overdraft limit?
Yes. Limits are reviewed based on account activity, income, and repayment behavior.
5. What happens if I don’t repay an overdraft?
The provider may restrict your account, reduce your limit, or report you to credit bureaus.
6. Is Fuliza an overdraft?
Yes. Fuliza is Kenya’s largest mobile overdraft service via M-PESA.
7. Which overdraft is easiest to qualify for?
Fuliza is the easiest since approval is automated. Bank overdrafts require income verification.
8. Are overdraft loans safe?
Yes, as long as they are used responsibly and cleared quickly to avoid high charges.
Final Thoughts
Overdraft loans in Kenya offer convenient, fast and reliable solutions for emergencies and short-term financial needs. Whether you choose Fuliza or bank overdrafts, always compare costs and clear your overdraft as soon as possible to avoid accumulating fees.