Businesses in the tourism and hospitality sector say some banks are capitalising loan interests for the duration companies will not be operating, thereby increasing the loan’s total costs.
The businesses now say this stands in their way when they seek loan restructuring as temporary way of easing their cash flow problems pending the start of the recovery fund.
Both the Rwanda Bankers’ Association and the hospitality players said specific details of how the facility will play into the latter’s push for loans restructuring at no cost would be known later.
“We expect that banks’ responsiveness will be higher after getting the details of how much the facility will be and its modalities,” director general at Rwanda Chamber of Tourism Frank Gisha Mugisha, told Rwanda Today.
A survey released on April 3 indicate that as at March 31, business in the tourism and hospitality sector debts amounted to Rwf87.7 billion worth of bank loans.
The tourism chamber at Private Sector Federation (PSF) therefore argued that recapitalization of the interests only exacerbates the situation at a time most businesses were still struggling with bank loans.
Rwanda Banker’s Association Chairperson Robin Bairstow told Rwanda Today Banks have been processing requests of clients seeking their loans restructured for a period ranging between three to 12 months but defended the capitalization of interests as dictated by the nature of the bank business.
Government data show that in total banks received 8, 667 requests for loan restructuring amounting Rwf555.9 billion between March 16 and April 10, 2020, of which 7, 952 loans have so far been restructured, equivalent to Rwf3.3 billion as other requests wait for board decisions.