Bank borrowers risk CRB listing after relief period expires
Borrowers now have three months to regularize their loans.
You will soon need to regularize your bank loan repayment procedures to avoid being listed by Credit Reference Bureaus.
This is after the Central Bank of Kenya announced on March 23rd 2021 the expiry of emergency measures on the restructuring of loans, allowing banks to review debt for borrowers affected by the Covid-19 pandemic.
Between March 2020 and February 2012, CBK says loans worth KSh1.7 trillion were restructured, accounting for 57 per cent of the banking sector’s gross loans.
But since the end of February 2021, after resumption of repayments and some payoffs, the restructured loans amounted to KSh569.3 billion, 19 per cent of the total gross loans.
Borrowers now have three months, which is until June to regularize their loans.
“Consequently, in accordance with standard procedures, 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.” The regulator said in a statement.
Just a few days after the pandemic hit in Kenya, CBK announced emergency measures to cushion bank borrowers from the adverse economic effects of the coronavirus, among them restructuring of loans for up to one year. The original expiry date was March 2 2021 and June 3 2021 is therefore an extension.
In the statement, CBK says that the emergency measures were effective in helping bank borrowers cope with the socioeconomic disruption.
“CBK assesses that these measures were highly effective. Borrowers were provided with various restructuring options including extension of repayment period, moratorium on principal or interest and waivers on interest or fees. The measures have provided space to borrowers to ride through the pandemic, mitigate job losses and pivot their business models to the new normal. For banks, the measures provided time to build additional capital and liquidity buffers to take them through the pandemic period and beyond.” Said CBK.