In light of the negative impact of coronavirus (COVID-19), the Central Bank of The Bahamas has agreed with banks and credit unions to defer the repayment on credit facilities for a three-month period.
“Some financial institutions have already announced credit support that could extend beyond three months. Although the administrative approach to implementing these and other accommodation 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 monetary authority said.
The central bank said that institutions will especially consider borrowers whose accounts were in good standing before the spread of the pandemic.
” Borrowers who can afford to do so are encouraged to continue making loan payments rather than see their loans increase through accrued interest.”— The Central Bank of The Bahamas
However, if the borrowers opt for this arrangement, once they have recovered from the financial fallout, they will have to pay accrued interests for the period.
“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. 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 also advised that beneficiaries of the Government’s social assistance and relief payments deposits to their accounts cannot use the funds to pay against their debts with financial institutions.
While promising further details on the arrangement, the Central Bank of The Bahamas said 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”.