Affected borrowers get another round of payment relief

• Eligible borrowers must request new concessions on or before June 21 
• Penal interest cannot be accrued or charged during concessionary period (15 May to 31 Aug)
• Banks should not levy excessive fees or charges in relation to granting concessions
• Banks told to discontinue charging for cheque returns and stop payments in relation to all cheque payments until June 30
• Borrowers who currently enjoy moratorium under previous measures not eligible

The borrowers affected by the expansive restrictions imposed to control the COVID-19 third wave have been granted with another round of relief, the fourth round since the outbreak of the virus in March 2020 as the Central Bank has been seeing a flood of requests seeking relief on loans. 

Issuing a circular to licensed commercial and specialised banks, the Central Bank on Tuesday said affected borrowers could seek to defer installments on their loans till August 31, 2021 for facilities which remained in the performing status through May 15, “considering the financial difficulties faced by eligible borrowers, such as job losses, loss or reduction of income/salaries or sales, closure of business etc.” 

On the loans, which were on non-performing category as at May 15, banks may reschedule them over a longer period considering the repayment capacity of the borrower and an acceptable revival plan. The bank and the borrower could agree on the terms and conditions of this rescheduled loan, including its interest rate.  

“The deferment of capital, interest or both shall be granted for one or more of existing credit facilities granted in Rupees or in foreign currencies, considering the financial difficulties and repayment capacity of the eligible borrowers,” a Central Bank circular said.  

Banks may charge no higher than 1 year treasury bill rate as of May 19, which was at 5.18 percent, plus 1 percent on rupee facilities, “for the deferred period and only on the deferred amount,” the circular said while asking banks to charge a concessionary interest rate on foreign currency loans that receive deferment. 

Besides this new set of relief, the Central Bank said banks on their own accord can offer additional concessions to borrowers affected by the current restrictions, but added that such relief cannot be less than the benefits stipulated in the circular. 

“Alternatively, licensed banks may restructure the existing credit facilities over a longer period, considering the repayment capacity of the borrower and an acceptable revival plan. In this case, the licensed bank and the borrower shall agree on an interest rate, considering the prevailing low interest rates”, the Central Bank said.
The affected borrowers can forward their requests to make avail for the concessions on or before June 21 in writing, including electronic means. 

 But the Central Bank said banks should practice flexibility to entertain any request received after June 21, if the delay is deemed acceptable. 

However, those who are already under moratorium under the third round afforded to tourism and passenger transport sectors from April 2021 are not eligible for the concessions under this scheme as they already enjoy payment holidays through September 30.

Further, while banks are barred from charging penal interest from May 15 to August 31, they have also been asked to accommodate requests from borrowers to delay their installment by no more than 10 working days due to ongoing travel restrictions with no additional interest or charge. 

Further, banks can charge no additional fee or levy against the borrower for extending the latest round of relief. 
In other relief, banks have also been asked to extend the validity period of the cheques valued less than Rs.500,000 until June 30 and discontinue charging for cheque returns and stop payments on all cheques until June 30. 

Meanwhile, banks have also been instructed to do away with any early settlement fee if any borrower chooses to pre-settle a facility before its due date instead of opting for the relief.