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CBK Extends Loan Term Repayment by 3 Months

The Central Bank of Kenya (CBK) on Tuesday announced the extension of the loan repayment measures put in place for bank customers whose loans were performing before 2nd March 2020, which had lapsed earlier in the month for another three months to 3rd June 2021.

This means, lenders have until then to regularize their loan repayments following the expiry of a one-year window through which the lenders had extended and restructured the loan repayments for customers adversely impacted by Covid-19 pandemic.

The move by the Central Bank of Kenya (CBK) follows expiry of the one year loan repayment period granted bv the regulator on borrowers which elapsed on 2nd March 2021.

“Specifically, banks will from March 3, 2021, asses the performance of all restructured loans that were performing before March 2, 2021. The period for determining the performance of all restructured loans will begin on March 2,2020 but went into arrears after that date,” CBK stated.

According to the central bank of Kenya, total loans restructured since March 2020 amounted to Kes. 1.7 trillion by the end of February 2021 accounting for 57% of the banking sector gross loans.

However, the resumption of repayments and some pay-off, the regulator says outstanding restructured loans as at the end of February amounted to Kes. 569.3 billion or 19% of total gross loans.

“Over 95% of the outstanding restructured loans are being repaid in accordance with the restructured terms.”

CBK Moratoriums

CBK introduced emergency loan restructuring measures in March last year to cushion borrowers from adverse effects on COVID-19 pandemic and ease pressure of meeting their loan obligations with their banks.

CBK says the measures which saw banks extend repayment period for loans performing before the pandemic struck, issuance of moratorium on principal or interest and waiver on interest fees helped mitigate job losses while helping borrowers and lenders navigate through the pandemic.

In January this year, the bank re-introduced charges on mobile money transactions of up to Kes 1, 000 ($9.17) by allowing Payment Service Providers (PSPs) to propose pricing structures for mobile money transactions save for person-to-person transfers of up to Kes 100 ($0.91) to any customer and network.

The bank, however, maintained that there will be no charges for transfers between mobile money wallets and bank accounts while the wallet and transactions limits will remain in force