Reprieve for Kenyans as banks agree to extend loan repayment periods by one year

CBK Governor Dr Patrick Njoroge. [Photo courtesy]

Kenyans servicing personal loans in commercial banks can heave a sigh of reprieve after commercial banks warmed up to the idea of extending the repayment period by one year owing to the effects of coronavirus.

On Wednesday, Central Bank of Kenya (CBK) Governor Dr Patrick Njoroge said the move was inspired by the vulnerable people in the country struggling to service loans in the wake of coronavirus outbreak.

“Banks will seek to provide relief to borrowers on their personal loans based on their individual circumstances arising from the pandemic. All personal loans that were current on March 2 will be eligible to consideration of extension for a period of upto one year,” said Dr Njoroge at State House Nairobi.

Following the directive, corporate borrowers and SMEs were advised to seek audience with their banks and come to an agreement on servicing of the loan with banks expected to foot the cost of the review.

Kenya Bankers Association (KBA) Chairman and Kenya Commercial Bank (KCB) CEO Joshua Oigara welcomed the directive by CBK.

“We will work closely with every single Kenyan. We are here to assure you we will stand with you in partnership. There is no need to say the banks won’t listen. We will work to reschedule repayment on loans or look at moratoriums,” he stated.

Dr Njoroge’s directive came amid an outcry by scores of Kenyans decrying hard economic times in light of the viral outbreak.

Muthoni wa Mwangi, who runs a mid-sized printing and publishing company in Nairobi welcomed the directive saying it was timely.

“The government has factored in people like me who owe the bank a sizeable amount of money yet the business is at a low for now because things are beginning to slow down. Now, I can rest easy knowing I will not have auctioneers at my doorstep next month because of an outstanding loan,” she told Jamhuri News.

The CBK boss also said money in the banks will be quarantined for one week to “kill the virus”.