Relief to Borrowers As Banks Restructure Loans worth Ksh 360 Billion

Kenyan borrowers will continue having reasons to smile as restructured loans have hit 360 shillings billion during the Covid-19 pandemic.

The loan restructuring followed a directive from the Central Bank of Kenya Governor Dr. Patrick Njoroge who advised lenders to extend loan repayment periods to cushion borrowers during the pandemic.

Lenders took heed to the request by CBK and their borrowers and started restructuring loans from March 2020 and up to now, the total has reached 360 billion shillings.

By the end of March, at least seven banks had restructured their loans worth 176 billion shillings and extended the loan holidays. The loans included borrowers with a personal account and business accounts.

CBK said business accounts for the most affected sectors had their loans restructured in March including Tourism which accounted for 31 percent, Real Estate (17.2 percent), Building and Construction (17.0 percent), and Trade (12.4 percent).

Personal loan accounts that were extended represented 1.2 percent of the total household loans worth 811.9 billion shillings as of March 2020.

In April, Treasury CS Ukur Yatani said the loan relief increased by 193 billion shillings from 273.1 billion shillings to include personal loans. This represented about 9 percent of the total loan book.

However, in April, non-performing loans increased to 13.1 percent from 12.5 percent in March with recent projections by Kenya Bankers Association showing that things could even worsen by the end of the year.

Dr. Patrick Njoroge is, however, arguing that lenders should not panic as the economy might take a turn soon. He advises that the situation should not prompt Banks to penalize themselves nor their borrowers.

In April, CBK projected that the economy would take a rebound in 2021 with a growth of 6.4 percent while the Treasury projects that the economy would contract by 6.1 percent in 2020.