Many households in Kenyans are struggling to keep up with their loans payment, due to the negative effects of the Covid-19 pandemic. The burden of debt on individuals brought about by the depressed economy, attributed to the COVID-19 Pandemic.
1.The significance behind the payments of loans.
Dubbing the Indebtedness has hard-hitting realities, for individuals and institutions alike. Whereby if not addressed, will accelerate the downward spiral of the current credit crisis in the country. In addition, numerous households are unable to service their loan. This is due to the falling significantly behind in their payment obligations. Few numbers as slightly turned behind in their loan servicing obligations. Whereas some have already taken advantage of the moratorium, on repayments to ease their repayment burden. Also, many are expecting changes in their credit rating, with their banking institutions and possible listing with Credit Bureaus.
2. The upcoming risks to the economy.
This group of borrowers and the loan portfolio will represent new Non-Performing Loans (NPLs). Henceforth, this will become a burden to banks and a risk to non-bank lending institutions in the near future. This affects both full-time jobs and hustlers, who were borrowing to support their small and micro-enterprises. Businesses yielding little to no returns in a Covid year, like show a red card to the economy of our country. There is an increase in the number of individuals, borrowing from saving and credit cooperatives, friends, family business credits, and mobile lenders. Though the commercial banks dominate the lending space.
YOU CAN ALSO READ;Why Marriage Worked In The Past.
3. The short term access to credits .
Many borrowers are opting for non-banking lending institutions, despite high lending rates for short term access to credits. This kind of debt accrues fast, thrusting the individual into a vicious circle that reinforces the adage – borrowing. The Collect Pro Indebtedness Survey comes against the backdrop of the Central Bank of Kenya Monetary Policy Committee report released at the end of September that showed personal/household loans amounting to Sh271 billion—equivalent to 33 percent of the gross loans to this sector—had extended their repayment period by the end of August 2020.Follow us in social media: