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CBK Governor Dr. Patrick Njoroge/CFM

Kenya

CBK May Reintroduce Loan Relief Measures Should The Situation Worsen

NAIROBI, Kenya, Mar 31- The Central Bank of Kenya may consider reintroducing loan repayments schemes for borrowers should the situation worsen in the next days as the third wave of the COVID-19 shakes the economy afresh.

Central Bank of Kenya governor Patrick Njoroge during the Post Monetary Policy Committee held on Tuesday said they will consider adopting any necessary measure if needed after consultations with various authorities.

“We will look at all these measures as needed and we stand ready to use whatever means and tools necessary if indeed they are needed,” said Njoroge.

“If things turn out that additional measures are needed because things have really worsened the obviously the MPC and other authorities and policymakers stand ready to deal with that,” he added.

Njoroge however cautioned that the banks and the borrowers however have to strike a balance.

“But at the same time you have to appreciate that for every measure the restructuring of loans comes at a cost where you have to balance it against the cost of those measures and the cost here potentially is to the depositors so we are conscious of that, for every borrower  there is a lender and behind the lender is a deposited those funds belong to somebody else and it is important to safeguard that because there is nothing as free lunch,” added Njoroge.

Restructuring of loans was among the emergency measures that the CBK announced on March 18 and 24 2020, to mitigate the adverse economic effects on bank borrowers from the coronavirus pandemic.

However, bank borrowers in the country need to regularize their repayment procedures after the Central Bank of Kenya announced the expiry of emergency measures on the restructuring of loans.

CBK said borrowers whose loans were performing before March 2, 2020, but were restructured and subsequently went into arrears, will have three months – up to June 3, 2021, to regularize their loans, an extension from the original expiry date, which was March 3, 2021.

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Last week the government introduced new measures to curb the spread of the coronavirus pandemic that has sparked fear amongst citizens over the loss of jobs.

 

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