Bank of Israel: Institutions should avoid legal action against struggling customers
The Supervisor of Banks at the Bank of Israel called on retail banks on Wednesday to resist initiating legal proceedings against customers experiencing financial difficulties as a result of the coronavirus outbreak.
In a letter sent to banks and credit card providers, Yair Avidan emphasized that, despite the reopening of much of the economy, many households and businesses “are affected and will continue to be affected” in the short – and medium-term by the economic fallout of the coronavirus pandemic.
Avidan, who assumed his position as supervisor of banks on May 17, reminded banking corporations that they “must try to exhaust all available avenues” to collect all components of customer debt prior to initiating legal proceedings.
“The banking system is the nerve center of the country’s economic and social system,” said Avidan.
“As such, it must continue to stand at the side of its customers at this time, in order to help them as much as possible to get through the crisis, while demonstrating fairness, flexibility, and sensitivity,” he said.
“The coronavirus crisis has not yet run its course, and the banks must therefore continue investing efforts and resources in the early detection of difficulties among their customers, try to help them meet their obligations, and work with them to reach arrangements before initiating legal proceedings.”
Amid growing concerns regarding the slow return of employees to the workplace and the possibility of a second coronavirus wave, data published on Monday by the National Insurance Institute (Bituach Leumi) showed that over 369,000 job seekers are likely to be left with no benefits should they fail to return to work by August. A further 100,000 job seekers will remain eligible for partial or full benefits.
Figures published by the Israeli Employment Service on Tuesday evening showed that over 356,000 Israelis reported returning to work since restrictions on the economy were first eased on April 19. Since then, more than 125,000 new applicants have submitted requests for unemployment benefits.
At the peak of the crisis, more than 1.12 million people – 27.5% of the workforce – had submitted applications for unemployment benefits. Unemployment declined to 23.5% by the end of May, or a total of 960,000 individuals.
Histadrut labor federation chairman Arnon Bar-David called on Prime Minister Benjamin Netanyahu on Tuesday to extend unemployment benefits for Israelis currently out of work until the end of August.
Such a move, the National Insurance Institute says, would cost the state NIS 3.3 billion ($960 m.).