Banks in Kenya have been encouraged by the Central Bank of Kenya to forego $123 million of the money they owe.

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The objective of the Central Bank of Kenya (CBK) is to reduce domestic debt inside the nation.

Banks in Kenya have been encouraged by the Central Bank of Kenya to forego $123 million of the money they owe.
Banks in Kenya have been encouraged by the Central Bank of Kenya to forego $123 million of the money they owe.
  • The Kenyan Central Bank has requested that lenders reduce their loan servicing costs by at least 50%.
  • At least 4.2 million Kenyan debtors would have their debts cancelled in part.
  • The action is intended to lessen the burden on people and small-business owners who were impacted by the Covid-19 outbreak.

The Kenyan Central Bank (CBK) said on Monday that a framework will be implemented by commercial, microfinance, and mortgage financing institutions through May 2023, easing the cumulative debts of more than 4.2 million Kenyans who had borrowed Ksh30 billion ($246 million) but hadn’t paid it back.

In order to reduce the borrowers’ debt by at least 50%, the CBK ordered lenders to forfeit at least Ksh15 billion ($123m) that they are owed by the borrowers.

“Through the framework, the institutions will grant a discount of at least 50% of the non-performing digital loans outstanding as of the end of October 2022, and update the borrowers’ credit standing from non-performing to performing,” the CBK’s statement reads in part.

The institution would then work out a repayment schedule with the borrowers for the remaining loan amount until May 31, 2023, according to the statement. The performance of the borrowers’ repayment during the six-month period will determine their credit standing with regard to these loans once the framework expires.

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