• CBK is pushing for a Sh100 billion credit scheme for SMEs.
• Sh15.3 billion has been availed to banks for lending after a reduction in the Cash Reserve Ratio (CRR) availed Sh35.2 billion additional liquidity for directly support to borrowers in distress.
Individuals and businesses are yet to fully take advantage of loan restructuring schemes by banks, the Central Bank of Kenya has said.
On Thursday, CBK called on individuals and businesses to approach banks for possible loan restructuring even as it pushed for affordable lending to Small and Medium Enterprises (SMEs).
Governor Patrick Njoroge said a paltry Sh9.9 billion of the Sh800 billion worth of loans in the market have so far been restructured, as of March 30, leaving most borrowers with credit burdens a time when the economy is reeling from effects of Covid-19.
“We need to encourage borrowers to reach out to the banks. Most are waiting for a blanket adjustment, it won't work like that,” Njoroge said.
Tourism accounts for the biggest share of restructured loans (31 per cent), real estate (17 per cent), building and construction (17 per cent), and Trade accounting for 12 per cent of the Sh9.9 billion restructured credit facilities.
CBK’s Monetary Policy Committee in March reduced the Cash Reserve Ratio (CRR) to 4.25 per cent from 5.25 per cent, freeing up Sh35.2 billion additional liquidity to banks for direct support to borrowers in distress as a result of the coronavirus.
Of this, Sh15.3 billion or 44 per cent has so far been availed to commercial banks, Njoroge confirmed yesterday during the post MPC briefing.
On Wednesday, the MPC lowered the base-lending rate to 7 per cent from 7.25 per cent, in light of the continuing adverse effects of Covid-19 to the economy.
Households and SMEs are however likely to miss out on cheap loans as a result of high-risk profiling.
To cushion SMEs, CBK is pushing for a Sh100 billion credit guarantee scheme for the latter.
Demand for credit, however, remains high with private sector credit growth at 8.9 per cent in the 12 months to March 2020, the highest since 2016.
“We expect this to pick up as we continue down the line to overcome the hurdles brought about by the pandemic,” Njoroge said.
To cushion its reserves, manage the shilling and address economic challenges, CBK is next week expecting $750 million (Sh80.4 billion) emergency assistance from IMF.
Another $1 billion (Sh107.2 billion) is expected from the World Bank inform of DPO(Development Policy Operations).
This is policy-based financing to support a country's programme of policy and institutional actions that promote growth and enhance the well-being and increase incomes of poor people.
“We expect this in the next couple of weeks,” Njoroge said.
Meanwhile, CBK has revised its 2020 growth projection downwards to 2.3 per cent, slightly lower than Treasury’s 2.5 per cent, but higher than World Bank’s 1.5 per cent.
It had projected a 6.2 per cent growth in January before revising it to 3.4 per cent in March.
Key sectors expected to contact includes transport by 10 per cent, and agriculture (2%).
ICT and health are however expected t0 expand by five and three per cent respectively.