Banks to extend loan repayments by one year as coronavirus effects hit economy

CBK Governor Patrick Njoroge. [PHOTO COURTESY]

Commercial banks have agreed to extend repayment of personal loans by a period of up to 12 months in a measure to cushion the economy from feeling the full brunt of the coronavirus impact.

Addressing the press at State House in Nairobi on Wednesday, Central Bank of Kenya (CBK) Governor Patrick Njoroge said the measures are aimed at shielding the most vulnerable in the economy.

“Banks will seek to provide relief to borrowers on their personal loans based on their individual circumstances arising from the pandemic. All personal loans that were current on March 2 will be eligible to consideration of extension for a period of up to one year,” said the CBK boss.

Small and Medium-sized Enterprises (SMEs) and corporate borrowers were, on the other hand, encouraged to contact their lenders on the potential for loan restructuring with banks being expected to harbour the costs of the review.

Mr. Njoroge also added that all cash that will be coming out of banks will be quarantined for at least one week; a duration he said would be “more than enough time for the virus to become inactive.”

He further reiterated his previous statement that banks would also eliminate charges on all transactions below Ksh.1,000 besides increasing the limit on a single transaction from Ksh.70,000 to Ksh.150,000.

The daily transaction limit has also been pushed up to Ksh.300,000 with the monthly limit of Ksh.1 million being scrapped out in its entirety.

“In order to further facilitate the use of mobile digital platforms, banks will waive all charges for balance enquiry,” he added.

Kenya Bankers Association (KBA) Chairman and Kenya Commercial Bank (KCB) boss Joshua Oigara, on his part, said: “We will work closely with every single Kenyan. We are here to assure you we will stand with you in partnership. There is no need to say the banks won’t listen. We will work to reschedule repayment on loans or look at moratoriums.”