Rwandan lenders are working tirelessly to cushion the ever-growing number of troubled customers with financial aid products that have been introduced to the market.
For example, in less than two weeks, the Bank of Kigali (BK), “Turikumwe,” a special employee loan product, registered over 2,000 online applications and 150 loan approvals. In addition, the bank is processing 500 requests.
BK information shows that many of the candidates are senior government officials who gave up their April salaries as a contribution to Covid-19 relief for vulnerable people, and needed a respite from the problems of Treasury.
OPI Atlas Mara introduced a salary loan specifically for officials who offered their April salaries to Covid-19 relief causes, which was also adequately underwritten.
“Many of our customers have been seriously affected, some are hotel workers whose contracts have been suspended for three months, so far we have received applications from those who have been affected and even from those who are not. were not, “said Ntabwoba Bonaventure, branch manager at BK. .
BK charges 15.5% interest on its emergency salary loan, repayable in 12 months, with a grace period of three months. Once approved, the client can receive up to two months’ salary and the maximum the bank can pay is Rwf 10 million. The BPR Mara Atlas loan offers a salary equivalent to one month. Banks carry out an internal assessment of the applicant, to check if he has an active contract with the employer, in order to minimize the risk. Customers whose contracts have been suspended by employers for three months, for example, can claim the Turikumwe loan.
“At least we know that with government employees we are safe because we are sure their jobs will not be lost,” Ntabwoba said. Customers apply for this loan facility digitally, the application deadline for Turikumwe is May 31, 2020 and can be approved within 48 hours.
I&M Bank Rwanda has cut its base lending rate from 16.5% to 16% as the bank prepares to ease the repayment burden on its customers during this time when the pandemic has caused shocks to a number of sectors.
The reduction, which took effect on April 15, will apply to those who are currently managing loans and those who will borrow in the coming days.
The lender has more than Rwf 170 billion in loans and advances to customers, and the reduction is expected to cost the bank between Rwf 80 and 100 million in the first few months.
Following the central bank directive that banks facilitate loan repayment by facilitating loan restructuring for their customers, banks have already done so for many of their customers, while others continue to receive and process requests.
BK has already received more than 1,000 requests for credit restructuring from its private customers in all sectors concerned, and more than 500 files are being processed for SMEs.
Maurice Toroitich, managing director of BPR Atlas Mara, said they have put in place moratoria for many of their clients, where interest and principle payments have been deferred, to ease the pressure on repayments during this period.
“Seventy to 80 percent of our SME customers have already requested the moratoriums,” said Toroitich.
He also noted that the bank does not charge any fees on digital transactions to make it easy for customers to conduct cashless transactions.
Tourism and hospitality customers have requested a grace period of more than three months, to which all banks respond positively, giving them up to 12 months.
For clients who wish to continue to manage their loan facilities, BK has waived all late payment penalties on term loans, including BK quick loans and credit card penalties for the months of March, April and May. .
The tourism and hospitality sector has up to Rwf 87.7 billion in outstanding loans, but it still needs Rwf 29.98 billion to continue operating amid the current shocks of Covid-19.
The National Bank of Rwanda recently reduced its lending rate to 4.5% from 5%, to boost economic growth amid the coronavirus pandemic which has dampened economic activity.
The central bank also relaxed prudential requirements to exceptionally allow banks to restructure the outstanding amounts of borrowers facing temporary cash flow problems resulting from the Covid-19 pandemic. As of April 10, commercial banks had restructured loans worth 255 billion Rwandan francs ($ 272 million).
A reduction in reserve requirements in March freed up Rwf 23.4 billion ($ 25 million) in early April, while a credit buffer of up to Rwf 50 billion ($ 53 million) is still available to lenders.