Kenyan banks restructured Sh1.7trillion loans in one year

By Seth Emmanuel

Since March 2020, loans amounting to Ksh.1.7 trillion have been restructured by end February 2021 accounting for 57 percent of the banking sector’s gross loans, figures by the Central Bank of Kenya shows.

The banking regulator figures show that, following the resumption of repayments and some pay-offs, the outstanding restructured loans as at end February amounted to Ksh.569.3 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.

The one-year period for the emergency measures on extension and restructuring of loans ended on March 2, 2021, following which the standard procedures for loan classification and provisioning would apply. Specifically, banks will from March 3, 2021, assess the performance of all restructured loans that were performing before March 2, 2020.

The period for determining the performance of all the restructured loans will begin on March 3, 2021.

These includes the restructured loans that were performing as at March 2, 2020 but went into arrears after that date.

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.

“CBK will continue to closely monitor the unwinding of the outstanding restructured loans to ensure the continued stability of the banking sector,” it said.