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Banks offer borrowers slight reprieve during coronavirus crisis – VIDEO

Banks will offer relief to their borrowers on personal loans that have been active as of March 2 due to the rising coronavirus pandemic that is threatening to create a financial crisis.

Central Bank of Kenya (CBK) Governor Patrick Njoroge on Wednesday morning said that the CBK has been in talks with the Kenya Bankers Association and have come up with measures to help reduce the adverse impact and crisis that the country is facing due to the virus.

Prof Njoroge says that they have anticipated the serious crisis ahead and do not want the health crisis to become a financial crisis.

“One of the things we have agreed on is that the banks will seek to provide relief to borrowers on their personal loans based on their individual circumstances arising from the pandemic. As you can imagine about 28 percent of our loans are actually personal loans and a lot of our people have borrowed personal loans and are using it for something. And they will have those instances where they would probably lose their jobs or be put on leave in a sense that they may not have the cash flow to support the loan that they were actually servicing before,” Dr Njoroge said.

He added: “So all loans that were current on March 2 would be eligible, to this consideration. Specifically the personal loans, banks will review requests by borrowers to extend their loans for a period of up to one year. So if you have a personal loan and it has been current till March 2 and you are getting difficulties particularly because of the pandemic directly or indirectly you can go to your bank and they can discuss with you extending it in various ways. If at all the circumstances allow it could be a sense of a moratorium, but the point is that it can be extended up to one year.”

The cost of this extension and restrictions will be borne by the banks and not the borrowers. The aim, he says, is not to create a problem later but rather help the country and its people during this unfortunate time.

SMEs and corporate borrowers can also contact or go directly to their banks for a discussion on restructuring of their loans.

To increase the use of mobile digital platforms, banks will also waive all charges for balance inquiry including charges for transfers between mobile money wallets and bank accounts.

“We do not want to create a problem at the end we do not want to have a cliff, meaning at the end of this period we start having more problems than we started with and this is why this measure has been dealt with in that way and of course the banks will work closely with the borrower. On the SME’s and corporate borrowers, they can contact their banks and they will be assessed and have a discussion on restructuring of their loans, of course, this means the non-personal loans, therefore, they can go directly to the banks and the banks are open to having that conversation with them,” explained Prof Njoroge.