Banks Restructure Repayment of Loans worth Sh9.9 Billion

Borrowers have been handed a boost as they mitigate the effects of coronavirus pandemic as banks restructured loans worth Sh9.9 billion between March 18 and March 30 as requested by their customers.

Following the outbreak of the coronavirus, Central Bank of Kenya in mid-March ordered Kenyan lenders to provide relief to borrowers on their personal loans, with loans eligible from March 2 extended by up to one year.

CBK Governor Dr. Patrick Njoroge said that many businesses would be disrupted, especially the small and medium enterprises (SMEs) hence the call for tax reliefs.

Consequently, some banks announced a loan holiday for personal banking customers and SMEs to cushion them against the economic disruptions caused by the Covid-19.

Speaking at an online post-Monetary Policy Committee press briefing on Thursday, the governor asked borrowers to reach out to their banks for the restructuring of loans.

“Borrowers should endeavor to reach out to their banks, explain to them how the pandemic has disrupted your cash flow and repayment of the loan you may be servicing, don’t wait,” Njoroge said

He also stated that the effects of the virus on Kenya’s economy will slow growth in 2020 to 2.3 percent or even below from 5.4 percent growth recorded in 2019

The governor expounded that sectors such as the accommodation, transport and agriculture have already contracted by 50, 10 and 2 percent respectively while sectors such as ICT and health continue to expand.

“We expect 2021 to be a rebound, currently the estimate is 6.4 percent,” Njoroge told a virtual news conference.

The current account deficit is seen at 5.6 percent of GDP in 2021 compared with 5.8 percent in 2020, he said.

The governor also expects Diaspora remittances to slow in the month of April by between 12-15 percent down from an increase of 229 million US dollars witnessed in March.

Kenyans living in the United Kingdom, United States of America sent home the bulk of the money, other destinations such as the United Arab Emirates, South Africa and Mauritius recorded a decline.