Govt extends COVID-19 relief banking measures to June 2021

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As the Guyana Government continues to explore ways to relief the burden caused by the COVID-19 pandemic on citizens, it has announced the extension of the banking measures for another six months.

In a communique sent to the various commercial banks in Guyana – a copy of which was seen by this publication – Governor of the Bank of Guyana, Dr Gobind Ganga, indicated that all COVID-19 measures that were agreed to in August 2020 are now extended until June 30, 2021.

“The Bank of Guyana continues to monitor the developments surrounding the COVID-19 pandemic, its impact on households and the business sector, and is prepared to take all necessary steps to protect the safety and soundness of the finance system,” Dr Ganga detailed in the missive.

Back in August, President Dr Irfaan Ali had announced a series of measures agreed with the local banking sector to ease the burden on citizens. These include lowered interest rates and an extension of the moratorium on loan payments.

This means that customers with mortgages and other loans would be spared the financial burden of servicing those loans during the pandemic. In addition, their loans would not be classified as non-performing, ensuring that they do not default.

“Commercial banks agreed to offer general concessional reductions of interest rates of one per cent and up to two per cent on customer loans below $10 million until December 30, 2020. The existing lending rate ranges between 6.5 per cent and 16 per cent. Some commercial banks have agreed to apply special treatment to the interest accrued during the moratorium period,” the President had explained.

“Commercial banks have agreed to waive all bank charges, including ATM and Merchant Bank charges, to encourage more out-of-bank transactions as well as…transactions by senior citizens,” he noted, adding that these measures will not impact the soundness of the banking sector.

The Head of State had also announced that the Bank of Guyana would relax certain requirements that would allow banks to cushion their losses and increase liquidity by $9.4 billion. These requirements are set out in the 13 guidelines that the BoG uses to regulate financial institutions.

He pointed out that the Bank of Guyana would relax sections 14 and 15 of the Supervision Guideline Number Five until December 2020.

“Additionally, a waiver is being given to section 13 of Supervision Guideline Number Five. The relaxation of stringent statutory measures is intended to result in direct benefits for customers to banks, by giving the financial institutions the ability to operate with more flexibility.”

Section 13 states that, “the hardcore of an overdraft facility shall be converted into a term loan, which specifies a fixed repayment programme.

“To facilitate review of overdraft facilities, a licensed financial institution shall maintain an analysis sheet for each account, showing monthly balances and a summary of movements, indicating the total amount and number of deposits and withdrawals, and the accruals and repayments of interest charges.”

Section 14 of Supervisory Guideline Number Five speaks to a renegotiated loan which has been refinanced or rescheduled because of a borrower’s inability to repay. Among the stipulations in the section is that a commercial loan cannot be renegotiated more than twice over the life of the original loan, and that a mortgage cannot be renegotiated more than twice in five years.

Meanwhile, section 15 stipulates that an account shall be written off three months after it is classified as a loss, unless there is a significant improvement which shows that there can be a recovery within the next six months. It also sets out that a record of bad debts must be kept for monitoring purposes.