Available Central Bank of Kenya (CBK) figures show that banks extended the repayment period of personal loans to customers, worth KSh 105.2 Billion at the end of April 2020. This is compared to KSh 9.9 Billion in March.
This is as households and firms experienced difficulty in serving their loan repayment obligations due to COVID-19 related disruptions.
According to a bulletin by the Central Bank of Kenya (CBK), dated 21st May 2020, authored by its Governor Dr Patrick Njoroge (CBK), these payment rescheduling involved 39,725 loan accounts from 6,430 accounts in March 2020.
These personal loans make up 3.6 per cent of the total banking sector loan book as at April of KSh 2.868 Trillion.
Most of the loans extended were for 9-12 months, which accounted for 47.7% of the personal loans extended. This CBK report, which looks at the status of the banking sector and its outlook in the light of COVID-19 disruptions states that 26 out of 39 banks reported having extended personal loans in April, an increase from 13 banks in March 2020.
Loans of 3-6 months, worth a total of KSh 23.15 Billion were restructured, which accounted for 22.6% of total extensions.
Business Sector Restructured Loans
CBK also restructured loans to firms in 10 sectors most affected by COVID-19. These sectors include Agriculture, Manufacturing, Building and construction, Mining and Quarrying, Energy and Water, Trade, Tourism, Restaurant and Hotels, Transport and Communication, Real Estate and Financial Services.
In April, the restructured loans in these key sectors were worth KSh 170.6 billion, which accounted for 5.95 per cent of the total loan book as at April of KSh 2.868 Trillion.
As at May 15, 2020, 18 commercial banks and 2 microfinance banks had been granted approval to access KSh 29.08 billion from CBK as a result of reduction in cash reserve requirements(CRR). This accounted for 82.61% of the KSh 35.2 billion freed by the 1 percent reduction in CRR.
“With 82.61% having been used in just one and half months, depicts the relief provided to borrowers to address the impact of COVID-19,” said Dr Njoroge, CBK Governor.
The main sectors funded by banks over these period are Tourism (34.51%), Transport and Communication (13.76%), Trade (12.38%), Real Estate (12.37%, Manufacturing (11.77 %) and Agriculture (10.91%).