[ad_1]
The Central Bank issued new instructions to the banks coinciding with the end of the period of deferral of the clients’ credit rights, which amounts to 6 months, during the current month of September, and the beginning of the collection, when the banks began to collect those benefits.
Since mid-March last, the central bank had instructed banks to postpone the payment of loan rights installments to all customers for a period of 6 months from the date of issuance of the decision, as part of a package of measures to deal with the repercussions of the spread of the new Corona virus.
The content of the periodic book published today:
The Central Bank noted in the periodic book, issued on Monday, that these instructions arise from the bank’s monitoring of economic conditions and work to stabilize the banking sector, with the aim of continuing to support customers whose cash flows have seen affected during the current crisis.
The Central Bank indicated that banks must adhere to the following:
1- Each bank must carry out an exhaustive review of the existing credit lines and study the position of all clients and their future cash flows, in order to determine the appropriate measures that will be taken to serve them.
2- The Central Bank added to the importance of these measures being in line with the payment capacity of the clients, without representing a pressure on the liquidity of the companies so that they can continue their business, as well as of the people affected by your negative income.
3- The bank restructuring of clients’ debts in order to achieve a new structure of credit lines in proportion to their current repayment capacity, with special attention to clients whose activities were affected during the previous period, provided that is done through one of the following alternatives, for example Not limited to:
1- Restructuring of overdue installments without calculation of fines
2- Increase in the duration of credit facilities.
3- The possibility of granting a grace period to companies based on the nature of their activities and future cash flows in a way that does not affect their liquidity.
4- Capitalization of the value of returns.
3- The importance of adhering to the instructions issued on the fundamentals of evaluating the credit quality of customers and establishing provisions in accordance with the decision of the Central Bank Board of Directors issued in its session of May 24, 2005, and according to the instructions issued on February 26, 2019 in relation to the application of the International Financial Reporting Standard (IFRS 9).
The Central Bank added to the importance of taking into account that in the event of debt restructuring and regular payment, without financial difficulties with the client, this is not considered an indication of a substantial increase in credit risk.
4- The importance of each bank studying and analyzing the global risks associated with the current crisis, conducting stress tests to determine the impact of the crisis on the credit portfolio, as well as in various economic areas, and developing plans to deal with to possible losses.
