Central Bank regulatory measures to revive COVID-19-hit businesses  

The Central Bank (CB) has taken “extraordinary regulatory measures” to revive business sectors that were adversely affected by the COVID-19, issuing guidelines to banks towards its empowerment under the Banking Act.
Under this directive every licensed commercial bank shall maintain liquid assets in such amount as may from time to time be determined by the Monetary Board, the CB said in a circular to banks.
This will be subjected to the nature of the business carried on by such bank provided that the percentage determined by the Monetary Board shall not be less than 20 per cent and not more than 40 per cent.
Licensed commercial banks shall consider the new credit facilities granted to the construction sector against “Letter of Acceptance of Payments of Outstanding Bills to Contractors” issued by the Government as liquid assets for the purpose of computation of Statutory Liquid Assets Ratio (SLAR), until 31 December 2020, subject to a haircut of 10% of such credit facilities, CB guidelines stipulate. 
These banks are permitted to initially classify the new credit facilities granted to the construction sector against “Letter of Acceptance of Payments of Outstanding Bills to Contractors” issued by the Government, as performing loans without considering the current classification status of other existing facilities, provided that the new facility is granted for the purpose of new economic activities.
The Central Bank has directed licensed commercial banks to ensure compliance with all other requirements relating to classification of loans and advances, in case of subsequent default or potential risk of such borrowers. (BS)