Commercial banks IN Kenya will now be required to publish their portfolios of non-performing loans (NPLs) every month as the Central Bank of Kenya (CBK) moves to bring sanity into the sector.
Central bank Governor Dr. Patrick Njoroge said here Tuesday that the banks would also be required to furnish the central bank with information on insider lending.
The announcement by the CBK came as the portfolios of NPLs of commercial banks jumped to record levels last month.
The Kenyan banking industry has been on a roller-coaster ride this year following the near collapse of Chase Bank because of what the central bank described as Kenya’s biggest insider lending scandal.
The banks have also been mis-representing the portfolios of their NPLs loans with the central bank having to force them to reclassify their loans.
In order to stabilise the sector, banks will have to adhere to new requirements developed by the central bank.
Dr. Njoroge said banks would now be required to furnish the CBK with details of credit advanced to management and directors.
As at last month, the level of bad loans in the banking sector had hit a 10-year high of 8.2 per cent of total loans, pointing to a serious distress among borrowers.
The governor blamed this on high lending rates and he has directed banks to review downward their interest spread to suppress the portfolio of NPLs.
Dr. Njoroge projects the economy to expand by 6.0 per cent in 2016, up from 5.6 per cent growth recorded last year, supported by a stronger performance in agriculture, macro-economic stability and a recovering tourism industry.
Source: Nam News Network