Kenya Attempts To Ease Debt Burden On Citizens As It Urged Banks To Forfeit $123million of Money They Are Owed
The Central Bank of kenya announced on Monday that a new framework, to be implemented by commercial banks, microfinance and mortgage companies by May 2023, will cancel the collective debt of more than 4.2 million Kenyans who owe at least 30 billion shillings ($246 million).
Kenya central bank ordered creditors to waive at least 15 billion Kenyan shillings ($123 million) owed by their borrowers and reduce their debt by at least 50%.
The statement issued by the Central Bank of Kuwait read in part: “Through this framework, institutions will offer a discount of at least 50% on distressed digital loans maturing by the end of October 2022 and will update borrowers’ credit status. of not -running.”
The statement continued: “The institution will finalize a repayment schedule with borrowers for the loan balance by May 31, 2023. After the framework expires, the creditworthiness of borrowers with respect to these loans will depend on repayment performance during the six-month period.”
Most borrowers are individuals and small business owners, many of whom have been impacted by the Covid-19 pandemic and now the country’s current economic situation.
The Central Bank of Kuwait is unsure about the borrowers’ ability to repay these debts and is looking for ways to alleviate them, especially as some of them have lost their jobs.
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The negative effects of the pandemic remain for affected borrowers. Thus, the framework is expected to allow this segment of borrowers to access credit and other financial services while rebuilding their lives and livelihoods.”
According to the Central Bank of Kuwait, the purpose of this framework is to improve the credibility of mobile digital borrowers who have been reported to credit bureaus (CRBs) for not servicing loans they borrowed via cell phones.