Central Bank Approves a New Loan Repayment Holiday Until June 2021
The board of Directors of the Central Bank of Cyprus approved a new loan repayment moratorium until the end of June.
The new payment holiday, also approved by the Council of Ministers as part of support package to mitigate the impact of a new three-week lockdown to prevent the spread of covid-19, is extended to borrowers who did not utilize the 2020 payment holiday that ended in December 2020 as well as to borrowers who obtained a moratorium but didn’t utilize the nine-month duration.
Eligible borrowers are those who had arrears less than 30 days in the end of December 2020.
In press release issued yesterday, the CBC said “the loan repayment moratorium is targeted so it could support the liquidity of businesses and households which will face the biggest short-term liquidity problems due to the pandemic,” adding that support would be given to vulnerable groups whose obligations are collateralized by primary residence worth of up to €350,000.
The new repayment moratorium will be enforced with a Decree to be issued by the Finance Minister.
The CBC said in a press release that it “continues to closely monitor the developments in the economy fully aware of the impact of the pandemic.”
“With a view to alleviating this impact on businesses, households and on the banking sector so as to safeguard and strengthen financial stability of the country, the CBC decided to provide its consent to the Finance Ministry for a loan repayment moratorium to financial corporations in the framework allowed by the European Banking Authority Guidelines,” the CBC said.
Furthermore, the CBC decided to extent the relaxation of loan origination criteria until end-March with a view to allow easier access to short-term credit to businesses and households thus providing access to liquidity needed to cover their current obligations.
The relaxation of loan origination criteria concerns the evaluation of the borrower’s repayment capacity and the necessary documentation which borrowers are obliged to provide the banks, aiming to a faster loan origination procedures, the CBC said.