Borrowers in good standing will benefit from a three-month deferral on the repayment of their loans, now that the Central Bank of The Bahamas (CBOB) has made special arrangements with domestic commercial banks and credit unions.
This means that any loan payments lapsed during this period will not be classified as arrears.
However, the bank noted that interest would continue to accrue over this deferral period and stressed that borrowers who can afford to keep up with loan payments should continue to do so.
“Some financial institutions have already announced credit support that could extend beyond three months. Although the administrative approach to implementing these and other accommodations will vary across lending institutions, the Central Bank will extend tolerant regulatory treatment to exclude these credit balances from being classified as arrears or restructured loans,” the bank noted in a statement released yesterday.
“Social assistance and relief payments deposited into bank accounts will remain available to satisfy the assistance needs of borrowers and not to defray debt service obligations.”
The Central Bank said the accommodation will be revisited in June 2020 for appropriate changes that may still be warranted.
The economy is expected to contract significantly in the coming months as a global recession looms due to the COVID-19 pandemic.
Across the region, unemployment is expected to soar as businesses close and lay off employees.
“Borrowers should be advised that since any credit on which repayment has been postponed will continue to accrue interest, they should only take advantage of payment deferrals when other options or adjustments do not exist,” the Central Bank warned.
“Borrowers who can afford to do so are encouraged to continue making loan payments, rather than see their loans increase through accrued interest. In all instances, borrowers are urged to inform their lending institutions of hardships they may be experiencing from loss or reduction in cash flows, income or employment.”
The Central Bank concluded that it will continue to monitor economic conditions and make adjustments to monetary and prudential policies that promote and preserve the stability of the financial system.