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Commercial banks restructure loans worth over Sh360bn – Treasury

NAIROBI, Kenya, June 14- Commercial banks have so far restructured loans worth more than Sh360 billion, reflecting the cashflow burden brought by the coronavirus pandemic that has affected borrower’s ability to repay.

This is according to Treasury’s Cabinet Secretary Ukur Yatani who revealed that of the amount, Sh190 billion were personal loans.

“Since March 2020, banks have restructured loans in excess of Kenya shillings 360 billion including Kenya shilling Sh190 millions of personal loans,” Yatani said.

Yatani spoke while presenting the country’s spending plan for the financial year 2020/2021 on Thursday.

In Mid-March, Central Bank allowed lenders to offer relief to distressed customers after the first COVID-19 case was reported.

This was part of measures adopted by the Government to support Kenyans from a looming economic crisis caused by the outbreak of the disease in the country.

The bank regulator in late April revealed that the industry players had restructured loans worth Sh273 billion.

Most of the restructured loans fell in the tourism sector, that has been hard hit by the pandemic after Kenya closed its borders from tourists in a bid to curb the spread of the coronavirus disease.

Further, the loan restructuring directive also extended some relief to banks by the lowering of the commercial bank cash reserve ratio to 4.25 percent which saw CBK set aside 35.2 billion cash flow to banks.

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However, Kenya Bankers Association Chief Executive Officer Habil Olaka warned that the restructuring of loans by Kenya’s banking sector is likely to affect flow of cash in the industry by an estimated amount of Sh10 billion. 

According to analyst Reginald Kadzutu customers may fail to beat the new deadline set by banks which will further affect the banks’ balance sheet.

 “The situation will hit their revenue, my worry is after the covid 19 period will the factors that made people not able to pay have changed, I believe they will last longer,” Kadzutu told Capital Business.

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