This archive report was first published on 8 May 2020.
As the COVID-19 pandemic continues to affect the economy, the Central Bank of Kenya (CBK) has expressed concern over the slow response of banks in offering relief to distressed loan customers.
According to a CBK report, only 6,430 retail customers have received relief, amounting to a mere 1.2% of the total personal/household sector gross loans of Sh811.9 billion as at March 2020.
CBK Governor Patrick Njoroge noted that the banking industry, together with the CBK, had announced in March that banks would give breaks on loan repayments to customers affected by COVID-19. However, tough requirements by banks have denied many Kenyans the chance to get relief.
Among small and medium businesses, CBK said 1,841 loan accounts have successfully requested their banks to restructure loans amounting to Sh81 billion. The seven largest banks had by end of April restructured loans amounting to Sh176 billion.
CBK expects the number of people and businesses seeking relief from lenders to spike in the coming months, but also noted that the banking sector had started feeling the adverse effects of the COVID-19 pandemic due to a slowdown in most sectors.
CBK had instructed banks to provide relief to Kenyans and businesses which had taken loans that were up to date as of March 2. The relief measures included an extension of the loan repayment period by up to a year for banking customers with personal loans, and restructuring of loans by SMEs based on their unique situation and how hard they had been hit by the pandemic.
However, banks have imposed stringent measures for borrowers, making it difficult for many of their customers in distress to take advantage of the measures that were announced.
