For the best experience, please enable JavaScript in your browser settings.
Customers can now engage with their banks to extend their loan repayment for at least one year, the Central Bank of Kenya (CBK) has said.
That is if they find themselves in distress in the coming weeks when the impact of the coronavirus is expected to hit the economy hard.
This is among the measures CBK is putting in place to cushion consumers as well as the economy from the effects of the Covid-19.
Making the announcement yesterday, CBK Governor Patrick Njoroge also said the lender would hold onto cash coming from banks for a week to avoid passing the virus to people handling money.
“Banks will seek to provide relief to borrowers based on individual circumstances arising from the pandemic,” said Dr Njoroge.
There could be instances where people will lose jobs and may not have the cash flow to support loan repayments. All personal loans that were current on March 2 will be eligible for this consideration.”
Njoroge also noted that 28 per cent of the loans are of a personal nature.
“Specifically, banks will review requests by borrowers to extend their loans for a period of one year,” the governor said.
“If you are getting difficulties because of the pandemic directly or indirectly, you can go to your bank and discuss how you can extend the repayment period for at least a year.”
Njoroge also stressed that lenders will extend a similar relief to companies that might be finding it difficult to service loans as business slows down.
Already, tourism and horticulture have been identified as some of the sectors that have experienced a significant decline in returns.
The transport industry is also expected to be affected as people reduce their movement to avoid exposure.
“For startups and corporate borrowers, they can contact their banks about the restructuring of their loans. Banks are open to having these conversations,” Njoroge said.
He added that the cost of extensions on loan repayments would be borne by banks.
Stay informed. Subscribe to our newsletter
High risk
Cash transactions have been identified as among the high risk modalities of passing around the virus by the World Health Organisation. People have been advised to use financial technology, including mobile money, instead of cash.
KCB Group Chief Executive Joshua Oigara reassured Kenyans that bankers were willing to work with them, should they find themselves in a tough situation.
“The sector will work closely with Kenyans to resolve the issues that may come up. There is no need to say that banks will not listen,” said Mr Oigara.
Kenya has confirmed seven cases of the disease. Other than being a public health concern, the virus is also threatening to slow down the economy.