Regulatory Alerts2021-12-14
Circular dated December 14, 2021 regarding the temporary amendment to the treatment of non-performing loans for small and medium-sized companies in accordance with the instructions of International Financial Reporting Standard No. 9.
Firstly, regarding the implementation of the guarantee scheme for small and medium-sized enterprises (SMEs), it was agreed that all conditions must be met in full to ensure smooth application. Moreover, they confirmed their commitment to continuing the provision of credit guarantees at the same level as per the third stage, until SMEs manage to achieve the conditions required for advancement to the second phase. Secondly, regarding the special treatment granted to small and medium-sized enterprises due to the current situation: SMEs must upgrade their financial position from the third level to the second level while maintaining the provision of credit guarantees at the same level as per the third stage until SMEs can achieve the necessary conditions for upgrading. This is to ensure that their credit guarantee provision can be maintained at the second level. Thirdly, it was agreed that all what had been previously implemented will remain applicable for a period of 18 months from the specified date. Fourthly, banks are required to review the debt restructuring facilities provided to SMEs based on their current financial position and cash flows. This is done in order to achieve an appropriate level of debt rescheduling for each enterprise according to its capacity to repay, ensuring that banks can use this option, among others, to evaluate the borrower's situation and that of the customer, including: i) extending the term of debt rescheduling, ii) reviewing installment payment schedules, iii) providing additional facilities available for banks. Finally, they expressed their appreciation for the high level of trust and confidence placed in them.