AVAIL LOAN REPAYMENT HOLIDAYS - CBE

MBABANE – The Central Bank of Eswatini (CBE) has encouraged banks to consider restructuring loan repayments.

Where possible, banks have been advised to avail loan repayment holidays for businesses and individuals that have been directly or indirectly affected by the COVID-19. “Banks are further encouraged to consider absorbing the cost of absorbing such loan adjustment arrangements,” reads a statement from CBE. South African banks, especially Standard Bank, provided a three-month holidays for small businesses with a turnover of not more than R20 million per year.

Challenges

Local banks, at the time of compiling this report, had opened doors to their clients with challenges but no holiday had been publicly announced. The Central Bank, as previously announced, has taken steps to loosen monetary policy by cutting the discount rate by 100 basis points to provide much needed relief to all borrowers from the cost of servicing their loans.
To make liquidity available in the economy, the Central Bank further reduced the liquidity requirement for commercial banks by 500 basis points while reducing that for development and savings banks by 400 basis points.

According to a statement detailing measures taken in the fight against COVID-19, the Central Bank also reduced the reserve requirement from 6 per cent of customer deposits to 5 per cent of customer deposits for all banks. “All banks are well capitalised with adequate excess liquidity buffers to enable them to withstand the difficult times ahead.

Lockdown

“Banks will continue to provide all banking services to their customers through-out the partial lockdown period and beyond. ‘‘The Central Bank is working closely with banks to determine the extent of the impact of the pandemic to the financial sector through working out various scenarios which shall inform the most effective intervention or combination of interventions the Central Bank would need to put in place to assist the Banking sector to effectively deliver on their intermediation responsibilities even during this time,” reads the statement. The Central Bank also announced plans to review its emergency liquidity assistance tools available for lending to banks which are experiencing liquidity stress.

Extending

The Central Bank has decided to lower the cost of borrowing from such a tool as well as extending repayment or tenure from overnight to up to nine months. “The Central Bank will intensify its existing prudential measures and stress testing technics to allow it to closely monitor the performance of all banks and respond swiftly to any indications of stress at any point in time. The Central Bank further wishes to advise members of the public that investment services will continue to be available as per norm. However, the Bank would like to encourage members of the public to consider utilising electronic means as far as possible for interaction with the Bank,”  further reads the statement.

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