The Central Bank has required licensed banks to extend a debt moratorium to COVID-19 affected businesses and individuals for a maximum period of six months commencing from 1 October 2020. Eligible borrowers may request for the moratorium on or before 30 November.
The tenure o the moratorium will be up to six months. Eligible borrowers will be include businesses, proprietors and individuals engaged in identified business sectors, small and medium enterprises (SMEs), self-employment businesses and foreign currency earners who are facing financial difficulties due to the outbreak of COVID-19.
The eligible credit facilities include term loans, leasing facilities, pawning, overdrafts, trade finance or any other credit facilities excluding Saubagya COVID-19 Renaissance Facility, denominated in Rupees and foreign currency, which were in the performing category as at 1 October 2020.
The capital and interest due during the applicable moratorium period will be converted to a term loan. For Rs denominated loans the interest rate charged may not exceed 1 per cent over the 364 Treasury bill rate.
In the case of overdrafts, the interest falling due during the moratorium period will be converted to a term loan at an interest rate not exceed 4 per cent per annum. For pawning facilities due dates following during the moratorium will be extended till 1 April 2021.
The penal interest accrued up to 1 October 2020 should be waived off by the banks. The statement from the Central Bank notes; “The general public is requested to contact the respective banks to obtain further details of the debt moratorium and submit applications on or before 30 November 2020, in case they are facing difficulties to repay their bank loans due to the current upsurge of COVID-19 outbreak. To minimise the physical presence of customers in banks’ premises considering the current pandemic situation, the licensed banks are required to provide a simple format in hard/soft form with relevant information via printed and/or electronic means including email and SMS, to enable affected borrowers to make their requests to avail this concession.”
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