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Moratorium On SME Loans May Extend To Interest Payments

The government is considering extending the 12-month capital moratorium on non-performing loans (NPLs) of small and medium-scale (SME) businesses to interest payments, acknowledging the difficulties in meeting interest payments by some default SME debtors. The government and the CB were earlier planning to restructure these loans, including the unpaid interest, and to charge interest for the 12-month moratorium period. SMEs, which have both performing loans and NPLs below Rs.300 million, will be eligible to apply for the 12-month moratorium.

On performing loans, the government and the banking sector have reached consensus to offer a 12-month capital moratorium on the request of customers. The government is likely to finalise the specifics of the moratorium this week and subsequently the CB would issue a circular to banks by mid or end January. The SMEs that want to avail of this facility will have to make a request to their respective banks before January 20. The moratorium will be mostly applicable on term loans taken by SMEs and will not cover short-term export and import credit.

source: dailymirror