Last month Central Bank of Kenya (CBK) announced that lenders would offer relief on personal loans to borrowers in these difficult times of coronavirus pandemic.
The banking regulator had announced that all current loans, as of March 2, 2020, would be eligible for short payment holidays of up to three months or deferred payments of up to one year.
However, there are conditions attached to these benefits. Some lenders, for instance, have asked their borrowers to provide letters from employers that show proof of salary cut or job closure if they want to defer payment of their loans.
“For example, check-offs (off-payroll) will default when ones’ employment income is affected either through termination, salary cuts or other downward adjustments as a consequence of the Covid pandemic. Evidence of such will, therefore, be obtained by the bank as a CBK requirement,” said Mr Olaka.
However, the Consumer Federation of Kenya has thought the tough conditions May limit many borrowers from qualifying for the relief. “…it would be unfortunate (for banks) to make unreasonable demands (for loan relief), “ said Stephen Mutoro, the secretary-general for Cofek.
Stanbic Bank Kenya is among lenders who have announced a loan holiday for its borrowers and small & medium-size enterprises (SMEs) as from April 1.