Kenyan Banks to Reduce Amount of Loans Given Out Over High Default Rates
Kenyan individuals looking to secure credit from financial institutions should be prepared for challenging economic conditions, as a significant number of banks have indicated their intention to exercise caution when approving loans.
The Central Bank of Kenya (CBK) disclosed this information in the Market Perceptions Survey issued on February 9th.
As per the findings, a survey encompassing 32 commercial banks and nine micro financial banks revealed that the majority expressed caution when it comes to extending loans to the private sector.
“79 percent of the respondents expected economic uncertainty occasioned by the high cost of living to drive banks to become more cautious in lending to the private sector,” the survey noted.
The banks remarked that this was inevitable to minimize the risk of default.
Reports were indicating that the elevated expenses associated with conducting business, attributed to the costly foreign currency, reduced business engagements due to numerous taxes, and the elevated interest rates, could hinder the growth of private sector credit in 2024.
CBK carried out a survey aiming to ascertain the anticipated percentage increase in credit to the private sector by commercial banks by the conclusion of December 2024, in comparison to the conclusion of December 2023.
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Despite concerns about loan approvals, banks anticipated a steady increase in private-sector credit during the year 2024.
As per the Market Perception Survey, 71 percent of banks anticipate an increase in the number of Kenyan individuals seeking financial assistance in 2024.
This is partially a result of a rise in the need for short-term credit services driven by heightened demands for working capital.
The elevated cost of living is causing increased operational expenses, prompting a growing number of Kenyan individuals to turn to commercial banks in search of favorable loan conditions.
Additional elements that will motivate a higher number of Kenyan individuals to pursue loan options encompass the rise in prices of goods and raw materials, the devaluation of the domestic currency, and determined initiatives to sustain the viability of businesses.
Kenyan Banks to Reduce Amount of Loans Given Out Over High Default Rates
