Circular 115-2 on Loans Granted to Customers

Bank of the Republic of Haiti
CIRCULAR No. 115-2
TO FINANCIAL INSTITUTIONS

In application of the provisions of Articles 83 and 161 of the Law of May 14, 2012, on banks and other financial institutions, the Decree of June 5, 2020, on microfinance institutions, and the Law of June 21, 2002, on savings and credit cooperatives, banks, development finance companies, leasing companies, credit card companies, hereinafter referred to as "credit financial institutions," approved microfinance companies, and savings and credit cooperatives are required to comply with the following provisions regarding loans granted to their customers.

1. Loan Moratorium

a. Credit financial institutions may grant to any system debtor who wishes to benefit from it and who meets the eligibility conditions below, a moratorium until:
December 31, 2022, for loans granted to individuals; March 31, 2023, for loans granted to businesses.

Loans eligible for this moratorium are those classified as Current or To Be Reported as of June 30, 2022, and which became non-performing as of September 30, 2022, or have a high probability of becoming so thereafter, due to the socio-political troubles currently experienced by the country.

b. Approved microfinance companies, banks with microcredit divisions, and savings and credit cooperatives (SCCs) may grant their eligible clients who wish to benefit from it a moratorium until March 31, 2023.

Eligible clients are those whose loans were healthy as of July 31, 2022, and who became non-performing as of September 30, 2022, or are likely to become so thereafter, due to the socio-political troubles currently experienced by the country.

During the moratorium period, only the payment of interest on receivables is due, and the credit classification of beneficiary clients is that recorded as of June 30, 2022 (for credit financial institutions) or July 31, 2022 (for microfinance companies, bank microcredit divisions, and savings and credit cooperatives). This classification must be communicated to the Credit Information Bureau (BIC) until the expiration of said period. It is understood that the financial institution must inform the BIC of the implementation of the moratorium for beneficiary clients.

2. Restructuring and Provisioning

a. By mutual agreement with its client, a credit financial institution may, in accordance with Circular No. 87 on loan classification and the establishment of provisions for doubtful debts, proceed to redefine the terms of a commercial loan that was healthy as of June 30, 2022, and which became non-performing as of September 30, 2022, or has a high probability of becoming so thereafter, due to the recent socio-political troubles currently experienced by the country. For a loan thus restructured, the financial institution is authorized, for a period of one (1) year, to apply a minimum provisioning rate of 5%. The credit financial institutions covered by this circular have until December 31, 2022, to carry out such restructurings.

If a company that benefited from the aforementioned moratorium records arrears in interest payments for three (3) consecutive months during the moratorium period, its loan will be automatically classified as non-performing, and the moratorium will become void. The financial institution may then, by mutual agreement with the concerned company, restructure said loan. For a loan thus restructured, the financial institution is authorized, for a period of one (1) year, to apply a minimum provisioning rate of 20%. The credit financial institutions covered by this circular have until March 31, 2023, to carry out such restructurings.

Loans restructured by credit financial institutions under this circular will be reported to the BRH in accordance with the provisions of Circular 87 - or its amended version if applicable - with the mention "restructured loan Circ. 115-2" or "restructured loan Circ. 115-2/after moratorium," as applicable.

b. Microfinance companies, bank microcredit divisions, and savings and credit cooperatives (SCCs) may, by mutual agreement with their clients, restructure loans that were healthy as of July 31, 2022, and became non-performing as of September 30, 2022, or are likely to become so thereafter, due to the socio-political troubles currently affecting the country. For loans thus restructured, these institutions are authorized to apply, for a maximum period of six (6) months, a minimum provisioning rate of 25% in the case of an SCC, or a provisioning rate corresponding to 10% of the rate normally applied to restructured loans in the case of a microfinance company or bank microcredit division. Microfinance companies, bank microcredit divisions, and savings and credit cooperatives have until March 31, 2023, to carry out such restructurings.

If the loan of an eligible client who benefited from a moratorium from a microfinance company, a bank microcredit division, or a savings and credit cooperative has experienced payment arrears on interest for two consecutive months during the moratorium period, it automatically becomes non-performing upon the expiration of said moratorium. The microfinance company, bank microcredit division, or savings and credit cooperative may then choose to restructure this loan. For this loan thus restructured, the SCC is authorized to apply, for a maximum period of six (6) months, a minimum provisioning rate of 50%, and the microfinance company or bank microcredit division is authorized to apply a minimum provisioning rate corresponding to 50% of the rate normally applied to restructured loans. Microfinance companies, bank microcredit divisions, and savings and credit cooperatives have until March 31, 2023, to carry out such restructurings.

3. Other Measures

During the moratorium period, beneficiaries are exempt from late fees, with the exception of credit card companies.

Furthermore, in order to ensure the maintenance of the solvency of financial institutions in this context of socio-economic instability, the financial institutions covered by this circular are required to request a non-objection from the BRH for any project of dividend distribution or interest on permanent shares for the 2021-2022 fiscal year.

4. Reports

All financial institutions covered by this are required to electronically transmit to the BRH, on December 31, 2022, and March 31, 2023, a report on loans that benefited from a moratorium, no later than 21 days after the end of each of these quarters.

In addition, microfinance companies and SCCs must, with the same frequency, transmit to the BRH a report on loans that were the subject of restructuring during the period permitted under this circular.

The format of the reports to be transmitted is in the Annex.

5. Repeal and Entry into Force

This circular repeals Circular 115-1 of June 30, 2020, and enters into force on October 10, 2022.

Port-au-Prince, October 7, 2022
Jean Baden Dubois
Governor

ANNEX I
Quarterly Report on Clients Beneficiaries of Moratorium/Circular 115-2 Name of the financial institution____________________ Period from…………….to ………..
Client Identification
(Name of the individual or company)
Date of moratorium
(dd/mm/yyyy)
Loan balance at the date of grant of moratorium (in gourdes) Interest Payment:
Current (C) or Non- current (NC)
Client 1
Client 2
………
………

ANNEX II
Quarterly Report on Clients Beneficiaries of Restructuring/Circular 115-2 Name of the Microfinance Company or SCC____________________ Period from …………to…………..
Client Identification
(Name of the individual or company)
Date of restructuring
(dd/mm/yyyy)
Loan balance at the date of restructuring
(in gourdes)
Type of restructuring*
(M, R)
Client Behavior after restructuring(R,
NR)
Client 1
Client 2
………
………

• M: maturity extension; R: reduction of principal or payable interest amount.
  R: Regular; NR: Irregular.