Individuals and businesses borrowed coronavirus rescue loans totalling Sh17.59 billion from banks’ extra cash reserves in April, underlining the effects of the viral disease on cash flows in the economy.
Central Bank of Kenya
Central Bank of Kenya (CBK) data reveals that cash-starved companies and households tapped half of the loans made available from the end of March for borrowers affected by the impact of the global coronavirus pandemic which has created both a health and economic crisis.
On March 23, the banking regulator reduced the cash reserve ratio for commercial banks to 4.25 percent of their total deposits, down from 5.25 percent, saying the move released an extra Sh35.2 billion for lending to customers hit by the disease and the restrictions put in place to slow down its spread. Kenya reported its first Covid-19 case on March 12.
The extra cash following the cut of the cash reserve ration had increased to Sh53.9 billion by April 25, partly due to stringent borrowing terms imposed by the banking regulator.
CBK is controlling the coronavirus rescue loans and has directed banks to submit a list, including borrowers’ names, economic sector, amounts and the reasons for borrowing.
