Bank chiefs to meet govt. officials today on loan moratorium

As parties failed short to reach a consensus on the proposed loan moratorium yesterday, the bank chiefs are expected to meet the top government officials today to arrive at a more mutually agreeable solution on the SME loan moratorium announced last Friday.

The banking sector special working group, which includes Chief Executive Officers and Chief Financial Officers, met with the Central Bank officials yesterday seeking more clarity on the government’s proposal to offer a moratorium on SME sector loans up to Rs.300 million.

But the parties had fallen short of arriving at a consensus as the bankers had maintained the position that they were not prepared to take further financial hit, which could arise from the moratorium. The banks are going to today’s meeting with the hope that a more balanced approach to the proposed moratorium could be arrived at.

During today’s meeting the bankers had acknowledged the need to provide support to the struggling SMEs, but had stressed that it should not come at the expense of the health of the banking sector.

The last two years have been the toughest for the banking sector with growth coming to a standstill with weaker earnings and rising non-performing loans.

The Easter Sunday attacks exacerbated the situation for the banks as the multiple industries linked to tourism and affiliated sectors sought moratoriums
on their loans.

The banking sector special working group is expected to meet with the government officials led by Prime Minister’s Senior Economic Affairs Advisor Ajith Nivard Cabraal at the Temple Trees today.