The Central Bank of Kenya (CBK) has announced the expiry of emergency measures to mitigate the adverse economic effects on loan borrowers from the Coronavirus.
From March 2, 2020 borrowers were provided with various restructuring options including extension of the repayment period, a moratorium on principal or interest and waivers on interest or fees.
However, according to a statement from CBK on Tuesday, March 23, banks have been given the go-ahead to resume the recovery of loans.
Local banks have already begun assessing the performance of all restructured loans that were performing before March 2, 2020.
These include the restructured loans that were performing as of March 2, 2020, but went into arrears after that date
Consequently, in accordance with standard procedures, borrowers whose loans were performing before March 2, 2020, but were restructured and subsequently went into arrears, will have three months (June 3, 2021 deadline) to regularise their loans.
Cumulatively, since March 2020, loans amounting to Ksh 1.7 trillion were restructured by the end of February 2021 accounting for 57 percent of the banking sector's gross loans.
Following the resumption of repayments, the outstanding restructured loans as of February amounted to Ksh 569.3 billion, or 19 percent of the total gross loans.
Over 95 percent of the outstanding restructured loans are being repaid in accordance with the restructured terms.
The measures announced in 2020 provided space to borrowers to ride through the pandemic, mitigate job losses and pivot their business models to the new normal.
For banks, the measures provided time to build additional capital and liquidity buffers to take them through the pandemic period and beyond.
CBK will continue to closely monitor the unwinding of the outstanding restructured loans to ensure the continued stability of the banking sector.
