Debt moratorium extension for further 6 months to ease problems of borrowers
Amidst increasing complaints and grievances of COVID-19 affected individuals including leasing installment payers, the Central Bank has extended the existing debt moratorium for a further period of six months commencing from 1 October 2020 to 31 March 2021.
A large number of affected leasing installment payers including three wheeler drivers have already made representations to the government that many Non Bank Financial Institutions (NBFIs) have refused to grant this facility citing various reasons.
They complained that the promised six month moratorium is yet to materialise properly and they are suffering from loss of income and rising cost of living amidst the COVID-19 second wave.
NBFIs and some banks have insisted leasing installment payers to immediately pay the accumulated interest with monthly installment payment before extending the moratorium, a group representing vehicle loan payers complained.
According to the Central Bank (CB) circular the customer should pay the capital and/ or interest payments which fall due within the concession periods at a later date according to the revised repayment plan.
The 6- month debt moratorium is granted on leasing rentals only to self- employed individuals and individuals who own three wheelers, school vans, lorries, small goods transport vehicles and buses, and related assets such as motor bikes and taxis used for business purposes ( not for personal use).
If the leased vehicle does not fall into the above category and is also for personal use, all other borrowers can avail of an additional 60-day period to settle loans and advances that become due for settlement during the 60 day- period commencing from 01.10.2020.
According to CB guidelines payment of installments ( interest + capital) is not required until the end of the moratorium period.
However, when the moratorium period ends, customers will have to start making payments as agreed before the concessions were offered. No additional interest will be charged by licensed banks from customers, on the deferred capital and/ or interest installments, CB sources said.
Clarifying the position of NBFIs on granting and recovering of leasing advances, Chairman of the Finance Houses Association R. H. Abeygoonewardena told the
Business Times they had to strictly scrutinize the eligibility of customers when granting the moratorium in accordance with the CB regulations and guidelines.
The recovery process is also being carried out adhering to CB regulations he said adding that therefore all licensed NBFIs are considering applications of customers case by case before granting the moratorium.
Citing an example, he said that there was no need to grant moratoriums for three wheeler drivers in most of the areas operating in outstations and even in Colombo and the suburbs which were not restricted for mobility as there was no curfew.
He pointed out that a considerable number of leasing customers are servicing their debts without any delay and there was no seizure of vehicles due to late payments.