Thursday, March 30, 2023

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CB offers more relief for MSMEs and Individuals affected by the economic crisis

The Central Bank has taken concessionary measures for the benefit of Micro, Small and Medium Enterprises (MSMEs) and Individuals affected by the present macroeconomic conditions.

It has been announced the restructuring/rescheduling of performing and non-performing credit facilities, on a case-by-case basis, consequent to an objective assessment by financial institutions on the future repayment capacity/viability of the business.

The Central Bank has directed financial institutions to suspend the recovery actions against credit facilities classified as non-performing on or after 01.01.2020, on a case-by-case basis, consequent to an objective assessment by FIs on the future repayment capacity/viability of businesses, upon the condition that the borrower submits an acceptable repayment plan.

Licenced Banks LBs have been advised to consider the requests made by borrowers to settle their credit facilities early, without paying any additional fee.

In the case of lease facilities, recovery of future interest also to be waived off. NBFIs consider early settlement of existing performing or rescheduled credit facilities, by applying a reduced rate for early settlement charges and recovery of future interest.

CBSL has requested the respective FIs to communicate the above requirements across their branch network to ensure effective and speedy implementation of the respective concessions to MSMEs and individual borrowers.

Accordingly, FIs are requested to provide appropriate concessions with a view to facilitating the eligible borrowers to carry on their income generating activities and gradually commence repayment of their facilities.

Eligible borrowers are requested to contact the respective financial institutions with relevant information and documents to discuss and agree on repayment plans.

Borrowers are expected to commence repayment as agreed with the FIs, as non-repayment of loan obligations for a longer period, would result in unwarranted strains on both FIs and on borrowers.

The Central Bank of Sri Lanka (CBSL) has implemented several schemes of debt moratoria and concessions to assist the borrowers affected by the COVID-19 outbreak and subsequent macroeconomic developments, through Financial Institutions (FIs) supervised by CBSL.

These schemes included extended repayment periods, concessionary rates of interest, working capital loans, debt moratoria and restructuring/rescheduling of credit facilities for affected borrowers.

The last phase of the moratoria granted to COVID-19 affected borrowers of the banking sector and Non-Banking Financial Institutions (NBFIs) Sector ended on 30.06.2022 &31.03.2022, respectively.

During the different phases of moratoria and concessions, FIs have approved over 3.3 million requests for concessions, amounting to a total of Rs. 5,994 billion.

In January 2023, subsequent to the conclusion of the last phase of concessions, several requests for further concessions were made to CBSL and Government Authorities by borrowers representing various economic sectors, to tide over the challenges on repayment of loans amidst extraordinary macroeconomic conditions.

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