Central Bank urges reduction of interest rates, deferral of loan repayments for coronavirus relief
-Scotiabank announces measures
-Scotiabank announces measures
The Bank of Guyana (BoG) has urged banks to consider the reduction of interest rates on loans and a deferral of repayments as part of measures to cushion the expected financial effects from the novel coronavirus (COVID-19) pandemic on both individuals and businesses.
The call was made on Friday in a letter sent by BoG Governor Dr. Gobind Ganga to the Guyana Bankers Association Inc.
In the letter, a copy of which was seen by Stabroek News, Ganga notes the “likely economic and financial fallout” that may be caused by COVID-19, particularly to the banking system.
As a result, he said the BoG strongly encouraged banks to offer relief to individual and commercial customers in the form of a reduction of interest rates on loans and credit cards; a deferral of loan payments to assist customers in good standing; a deferral of loan payments by companies to assist with their liquidity requirements; a waiver or reduction of fees/penalties for Automated Teller Machine (ATM), Point of Sales (POS), Electronic Funds Transfer, debit card, and loan processing services, among others; and the encouragement to customers to reduce in-person transactions by using e-banking, ATM and POS services.
The letter also informed that the BoG, as the supervisory authority, would also be implementing measures to assist banks. These include allowing banks to renegotiate credit facilities; granting a three-month moratorium on the classification of affected accounts as non-performing; ensuring the foreign market continues to function to satisfy legitimate needs; and continuing with an accommodative monetary stance to promote sustained growth and the development of the economy.
“The BoG notes that the financial system is safe and sound and reiterates the critical role banks play in the economy. The BoG will continue to monitor COVID-19 and the evolving economic conditions and may consider other measures, if necessary,” Ganga further assured.
Before Ganga’s statement, Scotiabank had already announced relief measures including the deferral of loan payments to cushion the effects of the virus.
The bank on Thursday announced that it has launched a Customer Assistance Programme for customers affected by
COVID-19.
The programme, which takes effect in the new week, will provide assistance to customers who contact the bank and indicate that are impacted by COVID-19.
They will be able to have their loan payments deferred for up to six months (first for a period of three months with the possibility
of extension for a further three months). The suspension covers loan payments, including mortgages, auto loans, personal loans, credit cards and lines of credit.
Country Manager of Scotiabank Guyana, Raymond Smith said, “We are committed to working with our customers to help support them during this time. We know that the COVID-19 pandemic may lead to some customers being in a challenging position financially, so we hope these measures will help them navigate this period.” His comments were made in a media statement announcing the assistance programme.
According to the statement, while no payments will be due for the deferral period, interest will continued to be applied for retail, and business banking customers.
It was, however, noted that the accumulated interest will be payable at a later point in the loan cycle.
“These measures will definitely help customers’ cash flow over the next several months,” the bank said.
The measures in place for customers are as follows:
Retail Customers
● Payments for Secured and Unsecured Loans may be deferred for up to six months;
● Debt consolidation and Fixed Payment
Plans are available for customers requiring long-term financial assistance;
● This offer includes mortgages, all Scotia Plan Loans, Auto Loans, Scotia lines of credit and credit cards and will be available for three months with the possibility of extension for a further three months;
● Loan Fees and penalties for late payments will be waived on customer assistance facilities;
● The bank will also be implementing a reduction in credit card interest rates.
Business Banking Customers
● Payments for Secured and Unsecured Loans may be deferred for up to six months;
● Debt consolidation and Fixed Payment Plans are available for customers requiring long-term financial assistance;
● This offer includes mortgages, operating lines, term loans and credit cards and will be available for three months with the possibility of extension for a further three months;
● No processing fees will be applied to loans extended for working capital support for businesses affected by COVID19.
Scotiabank also announced that it will be offering support to its corporate and commercial banking customers impacted by COVID19 across various industries to maintain their operations.
These measures include:
● Temporary principal payment relief on term loans of up to six months, with a corresponding extension on the loan;
● Increased working capital lines of credit to cover payments and other business expenses;
● No loan fees for additional working capital for businesses impacted by COVID-19;
● The bank will also continue to offer a robust online banking platform to process payments to staff and suppliers thereby providing them with flexibility and ongoing connectivity to operate their business remotely (also available to Business Banking customers);
● These offers will be subject to applicable terms and conditions and requests will be assessed on an individual basis. Customers are encouraged to reach out to their Relationship Manager to discuss any needs for support. Stabroek News yesterday contacted other banks about their measures. Both Republic Bank and the Guyana Bank for Trade and Industry said they were examining measures and were likely to announce their plans soon. This publication was unable to get a response from the other banks.