The Central Bank of Sri Lanka (CBSL) requested licensed commercial banks and licensed specialized banks (licensed banks) to consider extending the concessions granted previously (until 31.08.2021) to borrowers affected by COVID-19 up to 31.12.2021, considering the new surge in the pandemic and the resultant difficulties to the borrowers.
In addition, Licensed banks have also been requested to offer additional concessions to affected borrowers, at their request, in a way that the overall benefits to the borrowers are not less than those specified by CBSL.
These new concessions are expected to provide an opportunity for affected borrowers to make arrangements to repay their dues regularly commencing January 2022.
Licensed banks are also expected to take note of the repayment capacity of affected borrowers and amicably agree on new repayment plans to facilitate customers to repay their dues without undue burden to their day-to-day activities.
Salient features of the concessions granted for COVID-19 affected businesses and individuals by Circular No. 08 of 2021 are as follows:
Concessions Granted for Performing Customers:
• Deferment of loan repayment until the end December 2021: For performing credit facilities as of 01.09.2021, to defer recovery of capital, interest, or both, on a case-by-case basis, during the period up
to 31.12.2021, considering the financial difficulties of the eligible borrowers, including loss of job, loss or reduction of income/salaries or sales, reduction or impairment of business operations or closure of
business, etc. Accordingly, borrowers obtaining this concession shall start repaying their existing facilities from 01.01.2022.
● Priority for Micro, Small, and Medium Enterprises (MSME): Licensed banks to give priority to the requests for concessions made by borrowers in the MSME sector.
● Combining loans under moratoria/deferment into one loan: Licensed banks to combine the amounts fallen due during the previous moratorium/deferment schemes (capital, interest, and
applicable interest for the respective moratorium period on the respective deferred amount) and the amounts fallen due during the current scheme (capital and interest) to a new loan.
● Repayment of the deferred installments (new loan) to commence from 01.07.2022:
– In the case of installment loans including lease facilities, licensed banks and the borrowers need to agree on a repayment period of up to 6 months, starting from 01.07.2022, to settle the new loan.
– The borrower may commence the repayment of the new loan at an earlier date, if the borrower wishes to do so, or can request a period beyond 6 months to settle the new loan. In such a situation the bank and the borrower to agree on a concessionary rate of interest.
● Charge a concessionary rate of interest on the new loan:
-Rupee facilities – banks may charge an interest rate not exceeding 6.93% per annum (i.e., 364- days Treasury Bills auction rate as of 31.08.2021 plus 1% per annum), commencing 01.09.2021, on the new loan referred to above, for a repayment period up to 6 months.
– Foreign currency loans or rupee loans with a repayment period beyond 6 months: banks may charge a concessionary interest rate.
● Extending the due dates of revolving credit facilities up to 31.12.2021 on a case-by-case basis including, but not limited to facilities such as working capital, pawning, temporary overdrafts, short-term trade finance facilities, provided such due dates fall during 01.09.2021 to 31.12.2021. Licensed banks may charge interest for the deferred period and only on the deferred amounts as mentioned above.
● Penal interest should not be accrued or charged during the concessionary period (01.09.2021 to 31.12.2021) for amounts falling due during the period.
● Know what suits you best: Licensed banks shall explain the benefits of commencing early repayment of deferred installments and the implications of extending the repayment period to the borrower so that
the borrower can make an informed decision.
● Opportunity to request debt restructure to match your new repayment capabilities: Licensed banks may restructure the existing credit facilities over a longer period, considering the repayment capacity of the borrower and an acceptable revival plan submitted by such borrowers.
● Benefits for customers who are eligible for concessions but willing to settle their facilities in advance: Banks are encouraged to provide interest rebates and required to waive off early settlement fees and other charges, including recovery of future interest of lease facilities from borrowers who are eligible for concessions, but have expressed their willingness to settle their facilities or amounts fallen
due during the moratorium period without opting for concessions.
Concessions Granted for Non-Performing Customers:
• Reschedule the non-performing credit facilities as of 01.09.2021, on a case-by-case basis, over a longer period, considering the repayment capacity of the borrower and an acceptable revival plan.
• All recovery actions to be suspended until 31.12.2021, against credit facilities that are classified as non-performing on or after 01.04.2020. Licensed banks shall take all precautions to avoid excessive contact/force the borrower or visit the borrower as a part of the routine collection procedure for such borrowers. In case of ongoing legal actions relating to recovery, borrowers should enter into an agreement in the Courts to obtain this concession.
● Extension of the validity period of cheques valued less than Rs. 500,000 up to 31.10.2021.
● Discontinuation of charging for cheque returns and stop payments of all cheque payments until 30.09.2021, discontinue late payment fee on all credit cards and other credit facilities during the period up to 31.10.2021 for customers who are demonstrably affected.
● Not to decline loan applications from eligible borrowers under this Scheme solely based on an adverse CRIB record.
● Participation in this concession (including previous moratorium/concessions) will not hurt the credit score or be negatively reflected in future CRIB reports.
● Consider any request from affected borrowers to delay the loan repayments up to a maximum of 15 working days due to the ongoing travel restrictions, without charging any additional interest or other
charges for such delay.
Application Deadline: The eligible borrowers who wish to apply for the concessionary scheme, are required to request the respective licensed bank on or before 21.09.2021, in writing or through electronic means.
Licensed banks are requested to accept any request submitted after the deadline if the reasons for the delay in making such a request are acceptable.
Review Procedure: In the case of a rejection of the application, licensed banks are expected to inform such rejection with reasons, preferably within 14 days in writing to the customer. If the customer is not satisfied with such response, the customer may submit a complaint to the Financial Consumer Relations Department (FCRD) using the Complaint Submission Form available on the CBSL website (www.cbsl.gov.lk/fcrd), for further review.