Banks asked to extend debt moratorium by further 6 months

• Six-month period will start from Oct. 1
• Says decision was taken to support biz and individuals affected by second COVID-19 wave
• Moratorium will be for both capital and interest 
• Borrowers asked to apply for moratorium on or before Nov. 30

The Central Bank yesterday directed banks to extend the debt moratorium to COVID-19-affected businesses and individuals for a further six months, commencing from October 1, 2020.

The Central Bank said this decision was taken with the view to meeting the challenges faced by businesses and individuals, due to the second wave of COVID-19.

The new circular issued by the Central Bank stated that the moratorium shall be granted for both capital and interest, on the request made by the affected borrowers.

The eligible borrowers may request for the moratorium on or before November 30, 2020, in writing or through electronic means.

Businesses, proprietors and individuals engaged in tourism, direct and indirect export-related businesses, including apparel, IT, tea, spices, plantations, logistic suppliers, event management and any other sectors that have been adversely affected by work disruption and local and overseas lockdowns, resulting from COVID-19, are eligible to apply for the moratorium.

Also, small and medium enterprises (SMEs) and individuals engaged in business sectors such as manufacturing, non-financial services, agriculture, construction, value addition and trading businesses, including authorised domestic pharmaceutical suppliers, are eligible for the moratorium.

Further, self-employment businesses and individuals who have lost their jobs or income due to the outbreak of COVID-19 and foreign currency earners, who have to repay loans in foreign currency and whose incomes have been adversely affected, due to the outbreak of COVID-19, are eligible for the moratorium.

The credit facilities that are eligible for the moratorium include term loans, leasing facilities, pawning, overdrafts, trade finance or any other credit facilities denominated in rupees and foreign currency, which are in the performing category, as at October 1, 2020.

The Central Bank said in the case of granting moratorium for Saubagya COVID-19 Renaissance Facility, under Phase I, II and III, the licensed banks shall adhere to the instructions issued on November 6, 2020.

Meanwhile, the Central Bank said the licensed banks should account for the moratorium as per Sri Lanka Accounting Standards and any additional guidance provided by CA Sri Lanka on financial reporting implications due to the outbreak of COVID-19.

It also said the licensed banks shall report the details of moratorium availed by their borrowers to the Bank Supervision Department, as at the 15th and 30th of each month, within five days commencing from December 15, 2020.