Mbabane: The Central Bank of Eswatini (CBE) has requested banks to grant payment holidays to struggling customers due to covid-19.
Speaking during the Annual Monetary Policy address 2020, held at the Royal Vilas, Ezulwini, the Central Bank of Eswatini Governor Majozi Sithole stated that, banks should consider giving payment holidays to struggling customers who have been affected by Covid-19.
Majozi Sithole has outlined several interventions which the bank has taken to cushion the economy on covid-19 effects which includes the finalization of the review of Legal Notice No.62 of 2016 which in the main amended only the component of cash deposit fees.
According to the governor an amendment notice has been published in the Government gazette and came into force on the date of publication thereto.
Sithole said banks are encouraged to work with COVID-19 affected customers and consider reasonable restructuring arrangements for struggling loans as opposed to fore closing on them.
He stated that the banks are encouraged to grant payments holidays and waive fees and penalties to affected customers during the COVID-19 pandemic.
The Central Bank, for purposes of COVID-19 affected customers, hereby permits banks to suspend provisioning as required by Inspection Circular No.8 for a period not exceeding six months.
Notably the effects of COVID-19 is likely to stress the banking sector. Therefore, banks are encouraged to restrict distribution of ordinary dividends during these precarious times. All payments of dividends shall require prior approval of the Central Bank.
The central bank governor also highlighted that granting payment holidays of COVID-19 affected borrowers or particularly affected classes of financial instruments should not automatically result in all those instruments being considered to have suffered significant increase in credit risk.
Worth noting is that local banks had already started the adjustment and review of loan repayment terms for its clients to cushion them due to the effects of Covid-19.
The Central Bank governor also encouraged banks to promote the use of digital delivery channels and consider waiving some of the fees and charges related to electronic transactions.
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