Banks directed to extend more relief to SMEs
The Central Bank (CB) Governor, Dr. Nandalal Weerasinghe has instructed all CEOs of licensed commercial banks and licensed specialised banks to promptly put relief measures in place to help the impacted small and medium-sized businesses.
In a letter to the CEO’s, he has said that the CB has observed that 1717 small and medium enterprise (SME) borrowers have already had discussions with the licensed banks as of March 31 for business revival, while only a minimal number of borrowers have received the relief measures provided. The regulator has requested the licensed banks to extend relief measures to eligible SME borrowers who started discussions with them.
Amongst the measures, increasing the prevailing interest waiver applicable, for settlement of unpaid interest within six months, where the aggregate capital outstanding is more than Rs. 10 million up to Rs.25 million as at December 15 last year, from 35 per cent to 65 per cent. The banks are required to appropriately factor such interest waiver into the rescheduling agreement based on an acceptable business revival plan submitted by the borrower.
They were requested to give new credit facilities to third-party borrowers of the same bank, which may be used to settle the existing Stage 3 credit facilities of eligible borrowers. The banks are expected to establish a mechanism to segregate such new credit facilities from other credit facilities to ensure close monitoring and to facilitate statutory and audit reveals.
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