This archive report was first published on 26 June 2020.
As the country grapples with the economic impact of the coronavirus disease, banks in Kenya have restructured loans worth Sh679.6 billion or 23.4 percent of the total loan book by end of May.
According to the Central Bank of Kenya, personal and household loans top the list with Sh199.1 billion reviewed since March or 29.3 percent of the total loans that have been restructured.
This highlights the struggle workers who had borrowed loans on the strength of their payslips are facing amid layoffs, pay cuts, and unpaid leave.
Businesses reviewed loans worth Sh480.6 billion in the period to May, led by firms in the trade sector followed by real estate, tourism, and the transport industry—sectors that have been hit hard by the effects of the Covid-19 pandemic.
The Central Bank of Kenya allowed lenders to offer relief to distressed customers in mid-March after the first positive case of Covid-19 in the country was reported.
Under the CBK's initiative to offer relief to borrowers, struggling individuals and companies can take a three-month repayment holiday, lengthen the tenure of their loans, or opt to just pay the interest for a period of time.
CBK Governor Patrick Njoroge said that the impact of the State restrictions to curb the spread of the coronavirus disease was severe in April, suggesting an easing of economic hardships.
“Total loans that have been restructured are worth Sh679.6 billion and accounted for 23.4 percent of the total banking sector loan book of Sh2.9 trillion. These measures have provided the intended relief to borrowers,” Dr Njoroge said.
