Central Bank announces fresh round of relief for borrowers

The Central Bank has issued two circulars, one to banks and another to finance companies, to support businesses and the individuals who fell into fresh difficulties, due to the ongoing economic crisis, which sent interest rates through the roof. 

The final round of moratoria expired on January 7, this year and since then, there has been an uptick in the non-performing loans in the banks. 

Hence, this new round of the relief will be offered on a case-by-case basis, after an objective assessment of the repayment capacity of each borrower. 

When extending relief however, the Central Bank requested the banks to give priority to the small and medium-sized enterprises, fixed-income earners and pensioners, who are badly affected by the present macroeconomic conditions.

The Central Bank also requested the banks to restructure and reschedule both performing and non-performing facilities, in view of the ongoing crisis, on a case-by-case basis. Meanwhile, the Central Bank further requested the banks to suspend any recovery actions against credit facilities, which fell into non-performing status on or after January 01, 2020, also on a case-by-case basis, subject to objective assessment on the future repayment capacity and viability of the business, upon the condition that the borrower submits an acceptable repayment plan.

The banks were also requested to facilitate early settlement of facilities, if a borrower chooses to do so, without charging an additional fee such as early settlement charges and future interest recovery on lease facilities. 

Until recently, the Central Bank maintained that it may no longer grant any more relief, after the final round of debt relief came to an end early January, this year.

However, it drew flak from several quarters, due to the need for further support for the small and medium-sized businesses struggling to recover from the fallout of the pandemic and then the economic crisis.