Banks Extend Loan Holidays to Customers Following COVID-19 Crisis

Kenyan banks have announced the extension of loan holidays for their customers as a way of cushioning them against the adverse effects of Covid-19.

The lenders said they were restructuring the loans amounting to 9.9 billion shillings borrowed between March 18 and March 30, 2020, and they have considered extending the repayment period.

In March 2020 the lenders announced a loan holiday for personal banking customers and Small and Medium Enterprises SMEs after the Covid-19 outbreak hit the country but following a request by the customers, the repayment period has been extended.

Central Bank of Kenya Governor Patrick Njoroge advised all customers servicing loans to make a prompt move and inquire from their lenders on the conditions of the repayment extensions.

“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, “said the CBK Governor Patrick Njoroge.

The CBK Governor had requested lenders to provide relief to borrowers on their loans and allow those who took loans from March,2,2020 to be given a grace period of one year.

In his argument, the Governor said the adverse effects of Covid-19 are likely to affect how borrowers will service the loans in 2020.

Speaking about the state of the Kenyan economy, the Governor said the country should expect a slow growth of up to 2.3 percent or even worse as compared to last year’s 5.4 percent.

Dr. Njoroge, however, said the economy would bounce back in 2021 if the Coronavirus pandemic will be contained this year.

“We expect 2021 to be a rebound, currently the estimate is 6.4 percent. The current account deficit is seen at 5.6 percent of GDP in 2021 compared with 5.8 percent in 2020,” the Governor said during a virtual news conference.