Regulatory Alerts2021-03-19 | Circular No. 5 of 2021Extension of Debt Moratorium for COVID-19 Affected Businesses and Individuals in the Tourism Industry
The Central Bank of Sri Lanka directs licensed finance and specialised leasing companies to extend the debt moratorium for tourism sector borrowers by six months, covering capital and interest from 1 April to 30 September 2021. Eligible borrowers must request this extension by 19 April 2021, while institutions are required to finalize agreements and convert due payments into term loans by 31 May 2021. The directive also mandates the waiver of unpaid penal interest as of 1 April 2021 and requires borrowers to submit long-term restructuring plans before the extended period concludes.
MONETARY BOARD CENTRAL BANK OF SRI LANKA
19 March 2021 | CIRCULAR | No. 05 of 2021
EXTENSION OF DEBT MORATORIUM FOR COVID-19 AFFECTED BUSINESSES AND INDIVIDUALS IN THE TOURISM INDUSTRY
With a view to meeting the challenges faced by businesses and individuals engaged in tourism sector due to the ongoing COVID-19 pandemic, the Central Bank of Sri Lanka (CBSL) requests licensed finance companies and specialised leasing companies, (hereinafter referred to as Non-Bank Financial Institutions (NBFIs)), to extend the debt moratorium granted for tourism sector under Circular No. 09 of 2020 dated 30 September 2020 for another six months (hereinafter referred to as the Scheme) commencing from 1 April 2021 as specified below. However, NBFIs may offer any additional options to borrowers, on the request of the borrower, in a way that the overall benefits to borrowers are not less than the benefits offered under this Circular. The aforementioned extension is granted in order to provide adequate time for borrowers to come up with proposals for a long-term arrangement. Therefore, borrowers shall submit an acceptable plan to NBFIs for restructuring of credit facilities over a long period of time, prior to the expiry of the extended moratorium period. Such plans shall be assessed on case-by-case basis by NBFIs. Accordingly, this Circular is issued to give effect to the Scheme in a consistent manner across all NBFIs.
The following provision of the Circular No. 09 of 2020 has been amended and other provisions will remain unchanged:
1. General Terms and Conditions
1 (iii) Debt moratorium refers to moratorium for both capital and interest for a further period of six months commencing 1 April 2021 to 30 September 2021.
1 (iv) Eligible borrowers who wish to avail the moratorium shall make a request seeking such moratorium to the relevant NBFI on or before 19 April 2021. NBFIs are requested to accept any request submitted after 19 April 2021, if the reasons for delay in making such request is acceptable. NBFIs are required to finalise the terms and conditions and enter into new agreements with eligible borrowers before 31 May 2021.
MONETARY BOARD CENTRAL BANK OF SRI LANKA
19 March 2021 | CIRCULAR | No. 05 of 2021
1 (vii) The instalment due on the interest free term loan (i.e. the interest accrued during the first moratorium period from 1 April 2020 to 30 September 2020) as per the Explanatory Note No.03 of 2020 and No.04 of 2020, and instalment due on converted term loan as per the Circular No.09 of 2020, may be recovered from the eligible borrowers commencing from 01 October 2021, if customers make a such request.
2. Structuring the debt moratorium
2 (i) NBFIs shall convert the capital and interest falling due during the moratorium period commencing from 1 April 2021 to 30 September 2021 into a term loan.
2 (ii) NBFIs may commence recovery of such converted loan once the extended moratorium period is over.
2(v) NBFIs shall waive off the accrued and unpaid penal interest as at 1 April 2021, if any, on credit facilities considered under this Circular. Penal interest shall not be accrued and charged during the moratorium period.
(Signature)
Prof. W D Lakshman Chairman of the Monetary Board and Governor of the Central Bank of Sri Lanka