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End of Restructuring of Loans by Banks in Sight As CBK Announces New Date

NAIROBI, Kenya, Mar 22 – Bank borrowers in the country will soon need to regularize their repayment procedures after the Central Bank of Kenya announced the expiry of emergency measures on the restructuring of loans. 

In a statement, 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.

This is therefore an extension from the original expiry date, which was March 3, 2021.

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.

Banks were directed to restructure loans for a period of up to one year of the loans that were performing as at March 2, 2020.

Other measures included the provision of regulatory flexibility to banks by CBK.

CBK said in a statement termed the year-long measures as ‘highly effective’.

“Borrowers were provided with various restructuring options including an extension of the repayment period, a moratorium on principal or interest and waivers on interest or fees. These measures have provided space to borrowers to ride through the pandemic, mitigate job losses and pivot their business models to the new normal,” the bank said.

The banks’ regulator announced that since March 2020, cumulatively, loans amounting to Sh1.7 trillion were restructured by end February 2021 accounting for 57 percent of the banking sector’s gross loans.

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Consequently, the resumption of repayments and some payoffs, the outstanding restructured loans as at end February amounted to Sh569.3 billion, or 19 percent of the total gross loans.

Over 95 percent of the outstanding restructured loans are being repaid in accordance with the restructured terms.

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