The Central Bank has directed commercial banks and other financial institutions to extend loan repayment holidays up to one year for borrowers affected by the current Coronavirus pandemic.
“The allowable credit relief measures and terms thereof include repayment holidays for a maximum of 12 months, loan tenor extensions, and any other forms of debt restructuring covered in existing regulations,” a statement by the acting bank deputy governor,Adam Mugume said.
“These credit reliefs shall only be granted within the 12 month period with effect from April 01, 2020.”
According to the statement, the Central Bank in its Monetary Policy Statement last week promised to put in place credit relief measures to mitigate the adverse effects of the Covid-19 pandemic in a bid to ensure stability of the financial sector and noted that in all , consumer protection should be top on the agenda.
“…any credit relief(s) offered must be in the best interest of customers, and with full disclosure. The decision to offer a credit relief to a customer or decline a request for a credit relief from a customer is the responsibility of the Supervised Financial Institution (SFI),” BoU said.
“Borrowers are encouraged to request, and Supervised Financial Institutions may offer, credit relief. In either case, the borrower must consent to any credit relief granted. The credit status at the time of granting a repayment holiday shall remain unchanged for the duration of the said repayment holiday. The prepayment of arrears as a condition for restructuring a credit facility is suspended for 12 months with effect from April 01, 2020.”
In their latest statement, the Central Bank assures of its commitment to safeguard financial sector stability.
On Tuesday, President Museveni said government would negotiate with commercial banks to see how they can restructure the loan repayment period for borrowers.
He however said government cannot undertake to pay the loans on behalf of the bank customers.