Regulatory Alerts2019-05-21 | Circular No. 1 of 2019Concessions Granted to Tourism Industry
The Central Bank of Sri Lanka issued Circular No. 1 of 2019 directing Licensed Finance Companies and Specialised Leasing Companies to grant moratoriums to tourism sector borrowers affected by national circumstances. The directive mandates that performing loans outstanding as of 18 April 2019 be suspended until March 2020, with due amounts converted into term loans recoverable from July 2020 at agreed concessionary rates. Additionally, lenders are required to waive penal interest, maintain non-performing loan classifications during the moratorium, and submit monthly reports detailing the concessions granted to eligible individuals and entities.
# CENTRAL BANK OF SRI LANKA
## DEPARTMENT OF SUPERVISION OF NON-BANK FINANCIAL INSTITUTIONS
### 21 May 2019 CIRCULAR No. 1 of 2019
## CONCESSIONS GRANTED TO TOURISM INDUSTRY
In view of the adverse impact on tourism industry due to the current situation of the country, Licensed Finance Companies / Specialised Leasing Companies (LFCs/SLCs) are requested to grant the following concessions to those individuals and entities in the tourism industry, who wish to avail such concessions.
(i) LFCs/SLCs may grant a moratorium to individuals and entities who have registered with Sri Lanka Tourism Development Authority or any other authority/agency to provide services to tourism, on a case-by-case basis (Annex I)
(ii) The moratorium shall be granted for performing loans (both capital and interest) till March 2020, in respect of outstanding credit facilities as at 18 April 2019.
(iii) The Board of Directors of the LFCs/SLCs or any authority delegated by the Board of Directors shall approve the granting of moratorium.
(iv) LFCs/SLCs shall convert the capital and interest falling due during the moratorium period into a term loan which shall be recovered from July 2020 onwards. A concessionary rate of interest may be charged for this facility.
(v) LFCs/SLCs and the borrower shall agree on the repayment period and the rate of interest on the above loans.
(vi) LFCs/SLCs may maintain non-performing loans in the same category for classification and provisioning purpose, during the moratorium period.
(vii) LFCs/SLCs shall waive off the penal interest to be charged on non-performing loans, during the moratorium period.
(viii) LFCs/SLCs shall maintain necessary documents to substantiate the granting of such concessions.
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# CENTRAL BANK OF SRI LANKA
## DEPARTMENT OF SUPERVISION OF NON-BANK FINANCIAL INSTITUTIONS
### 21 May 2019 CIRCULAR No. 1 of 2019
(ix) LFCs/SLCs shall report the moratorium availed by borrowers as per the format in Annex II, to the Director, Department of Supervision of Non-Bank Financial Institutions on a monthly basis by 15th of the succeeding month.
W. Ranaweera
Director, Department of Supervision of Non-Bank Financial Institutions, Central Bank of Sri Lanka
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## Annex I
### Interpretations for Circular No.01 of 2019
### 1. Individuals
Individuals include persons providing services to tourism sector and permanent employees of entities who provide services to tourism sector.
### 2. Registration
(i) Persons and entities providing services to tourism sector shall be registered with any of the following Institutions, as at 18.04.2019.
(a) Sri Lanka Tourism Development Authority
(b) Agencies under Sri Lanka Tourism Development Authority
i. Sri Lanka Tourism Promotion Bureau
ii. Sri Lanka Tourism Convention Bureau
iii. Sri Lanka Institute of Tourism and Hotel Management
(c) The Hotels Association of Sri Lanka
(ii) Persons and entities who have not registered with any of the Institutions referred in 2(i) above as at 18.04.2019, shall have at least registered their business/services with the local government authorities such as Pradeshya Sabha, Urban Council or Municipal Council as at 18.04.2019 and in order to avail the moratorium, such persons and entities shall now be required to register with the relevant institution/s referred in 2(i) above.
### 3. Granting of moratorium
(i) Individuals or entities who wish to avail the moratorium shall make a request to the relevant LFC/SLC seeking such moratorium.
(ii) LFCs/SLCs shall evaluate such request individually, including the requirement stipulated in para 2 above, in order to assess the eligibility.
(iii) The moratorium shall be granted for any performing credit facilities (both capital and interest) as at 18.04.2019 of such individuals or entities.
### 4. Accounting treatment under SLFRS 9
LFCs/SLCs shall comply with the instructions provided by the Chartered Accountants of Sri Lanka in relation to recognitions of interest income and accounting for financial assets (Annex III).
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## Annex II
### Circular No 01 of 2019
### Details of Borrowers Availing Concessions Granted to Tourism Industry
Name of LFC/SLC: ___________________________
as at end of: _______________________________
| Serial Number | Name of the Borrower | Amount Outstanding as at 18.04.2019 (Rs. '000) | Amount Considered for Moratorium (Rs. '000) | Loan Classification (Performing/NPL category) | New loans for dues during moratorium | Repayment period | Interest rate |
|---------------|----------------------|-----------------------------------------------|--------------------------------------------|---------------------------------------------|-------------------------------------|------------------|---------------|
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