EDITORIAL: CBK move welcome – Business Daily

Late last month the Central Bank of Kenya (CBK) cut the statutory cash reserve ratio for commercial banks from 5.25 percent to 4.25 percent in a bid to give the Covid-19 ailing economy a shot in the arm.

Essentially, this meant that banks would have more money at their disposal, which the regulator expects them to lend to individuals and businesses whose cash flow has been affected by the ripple effects of the pandemic.

It is encouraging to note that this week the regulator has moved to ring-fence the cash – now at Sh41.3 billion – to ensure that lenders only dip into the reserve to issue Covid-19-related loans. It is now upon banks to comply with the regulations around the fund and submit loan application forms to CBK, complete with details of who is borrowing and how to ensure compliance and also to ensure only the intended beneficiaries get the loans.

Of course, being conscientious corporate citizens, the public expects that lenders will do the right thing and will disperse the loans in line with the laid down regulations to ensure that the economy remains on its feet and the affected companies have the reserves they need to remain in business. In the same vein, since this is not free money, those who qualify must also ensure they repay the loans.

The most important thing is for business owners contemplating shutting down and laying off their staff to realise that they have a lifeline provided they can show how the coronavirus is impacting them.

ir businesses and make a commitment to honour their loan obligations once they fall due.