Financial institutions have up until Friday to submit loan amnesty list renegotiated under the payment relief to support businesses and individuals during the coronavirus pandemic.
The Central Bank of Kenya (CBK) set measures to track loans that will be given extension including monthly reports by banks, which shows details of the relief issuance, monitoring measures and set timelines for the loans to revert to normal.
In a circular to lenders, CBK said banks will meet all the costs of restructuring and must submit returns on 10th of each succeeding month.
“The initial return for the month ending March 31, 2020, will be due on or before April 10, 2020,” said the director of banking supervision Gerald Nyaoma.
According to measures set by CBK, individuals and small businesses seeking amnesty must prove that inability to pay is directly tied to the effects of coronavirus.
Banks will then be allowed to restructure the loans without affecting the quality of loan books as they will be exempt from prudential guidelines on classifying non-performing loans.
Governor Patrick Njoroge lowered the Central Bank Rate 100 basis points to reduce what banks pay on deposits, reduced the amount of deposits banks keep at CBK from 5.25 per cent of their deposits to 4.25 per cent.
He also extended borrowing window for banks on the repo market from one month to three months.
“The pain point of the coronavirus will be on personal loans. The objective now for the MPC is to ensure the asset quality, which will be the first challenge, we stop it from becoming a liquidity problem. If people are let go, job losses lead to difficulty in repayment and significant anxiety and stress. Banks are liquid, there is overall liquidity but we could end up getting pockets of tightness of specific institutions or specific areas,” he said.