CB yet to tell banks on re-finance facility extension limit
View(s):Just when the banks managed to get a slow breather after the timeline for the re-financing facility ended on May 15, they are faced with a fresh challenge.
A limit extension – by Rs. 100 billion to Rs. 150 billion – to the ‘Saubagya Covid-19 Renaissance Facility’ was proposed to the Cabinet by President Gotabaya Rajapaksa due to complaints received from many parties that they had not got relief from their banks.
The Cabinet decision, revealed on June 3 by Co-cabinet spokesman Minister Bandula Gunawardena, hasn’t been however told by the Central Bank to the bankers as yet. Initially the facility was for Rs. 50 billion to all banks with larger banks allocated about Rs. 8 billion while smaller banks were limited at Rs. 2.5 billion.
A senior CB official told the Business Times that the last date for applications was May 15. “The banks have screened the applications that were received and sent the details to us. We understand that the total value of the received applications was more than Rs. 100 billion but the banks had to match them to Rs.50 billion,” he said. The CB official said that he also got to know about the extension from the media.
“The government wanted to raise the limit because of the volumes of loan applications they were getting,” S. R. Attygalle, Secretary to the Ministry of Finance said noting the CB will need to notify this to the banks in due course.
The banks were inundated with applications since March and the regulator in April requested banks to at first process the Rs.25 million to Rs.10 million loans. “CB requested us to give precedence to applications which are seeking a moratorium for obligatory expenses such as electricity, water bills and salary payments,” a commercial banker said noting that these were in the Rs.10 million to Rs.25 million range.
The loans are to be paid off over two years at an interest rate equal to 4 per cent p.a and the regulator will subsidise interest cost up to 4 per cent for licensed banks as a rebate. (DEC)