Banking sector issues measures in the wake of Coronavirus
The Central Bank of Kenya has announced a set of measures that commercial banks will have to undertake in order to alleviate the adverse economic effects their customers may face from the coronavirus pandemic(covid-19). In a statement sent to newsrooms, CBK admitted that the adverse effects are still evolving and that the impact on some customers may be severe.
Borrowers whose loan repayments were up to date as at 2nd march 2020, CBK says banks will seek to provide relief for borrowers on their personal loans based on individual circumstances
The banks are also set to provide relief on personal loans, by reviewing requests from borrowers for extension of their loans for a period of one year thus borrowers are encouraged to contact their respective bank branches.
CBK Governor Dr. Patrick Njoroge said banks will have to wave charges for balance inquiries and also bear the cost of any restructuring during this time. He added that charges for transfer of mobile money wallets and bank accounts will be eliminated.
CBK further asked banks to waive all charges for bank inquiry by facilitating the increase use of mobile digital platform.
Dr. Njoroge in his briefing indicated that all the money from banks will be quarantined for one week before it is released to the market to cut chances of spreading the virus through cash handling.
Kenya is not the only country that is trying to put in place measures to cushion its citizens. The Monetary Policy Committee of the Bank of Mauritius has introduced a special relief amount of Rs 5.o billion through commercial banks. This means that from the 23rd of March 2020 to 31st of July all sectors including the SMEs will receive this special relief amount at 8 percent from 9 percent with immediate effect.
The disbursements will be effected through commercial banks as the bank of Mauritius will cap interest rate on the advances to impacted economic operators at the fixed rate of 2.5 per cent per annum. At the same time there will be a moratorium of six months on capital and interest repayments, with the loan repayment period being two years. Unlike Kenya, commercial banks in Mauritius will provide a moratorium of 6 months on capital repayment for existing loans for economic operators that are being affected by covid-19.
On the credit impairment measurement and income recognition the Bank of Mauritius has put on hold guidelines that were effective since January 2020. The decision was made to allow commercial banks to continue supporting enterprises facing cash flow and working capital difficulties in the context of covid-19. On matters bond, it will be effected through all commercial banks as per the terms and conditions of the relevant prospectus. The bond will be issued at par multiples of Rs 25,000 to individuals who are residents of Mauritius and up to a maximum cumulative investment amount of Rs1,000,000 per investor, whether singly or jointly, and to locally registered non-governmental organisations running on a non-profit making basis for the same maximum investment amount of Rs 1,000,000.
It is therefore imperative to note that African nations are coming up with measures to help and cushion its citizens from the economic effects of the covid-19 virus.