The debt moratorium to all COVID pandemic-hit enterprises and individuals estimated at Rs. 780 billion has been extended till 31 March 2022 by the Central Bank (CBSL).

The moratorium was to expire by 31 December to all except those in tourism, which got an extension till 30 June 2022.

CBSL said the extension was with a view to meeting the challenges faced by businesses and individuals due to the ongoing COVID-19 pandemic.

It has requested licensed commercial banks and licensed specialised banks (herein referred to as licensed banks) to suspend all types of recovery actions, including parate execution and forced repossession of leased assets.

As per CBSL estimates, the ongoing debt moratoria by banks and non-bank financial institutions amounts to Rs. 780 billion. This is in addition to Rs. 165.5 billion by way of concessionary working capital under the COVID-19 Saubagya Refinance Scheme.

As at end August 2021, banking sector loans amounted to Rs. 10.4 trillion, up by 18% from end 2020.

In its Short-Term Roadmap, the CBSL in October expected to unwind moratoria gradually and devise long-term plans to support businesses affected by the pandemic-related lockdown.

It was also proposed to provide liquidity support of up to Rs. 15 billion to finance interest accrued in loans that have been given the moratorium so that financial institutions could deal with the moratorium effect in a sustainable manner. 

An Emergency Lending Facility Framework was also mooted along with financial institutions being asked to develop ‘Post-COVID’ Revival Units.

Challenging fiscal situation persists amidst pandemic