Tourism sector moratorium estimated at Rs. 101 b: CB Chief

Friday, 12 July 2019 00:00 - - {{hitsCtrl.values.hits}}

Banks received 3,641 applications, 945 approved
Governor says moratorium working well, but working capital provision still working out kinks
NPLs unlikely to reduce from moratorium
NPL ratio 4.8% for banks, 7.9% for non-bank institutions

Central Bank Governor Dr. Indrajit Coomaraswamy yesterday said the total value of the moratorium for the tourism sector was estimated at Rs. 101 billion.

Responding to questions, Dr. Coomaraswamy told reporters banks had received 3,641 requests, of which 945 have been approved. The total of the applications was Rs. 101 billion with the remainder of the applications, approximately 2,696, still being processed.

“We are beginning to see a build-up of momentum. Clearly it took the banks a bit of time to gear up for it. First they had to figure out where the decision would be made, then get the messages down to their branches, and all this took some time. But we are beginning to see approvals picking up momentum. The general consensus in the tourism industry is the moratorium is working OK. Where there is a challenge still is these working capital loans, particularly for small people. This is just beginning to be implemented, as it took time for the Government to allocate money and for the program to be designed, and it will be administered through the three State banks,” he said.

However, NPLs are unlikely to be reduced by the moratorium, as those who are eligible for the moratorium were active payers of their loans. Those with NPL status when the moratorium came into effect were not covered, Dr. Coomaraswamy explained.

The sector currently has a 4.8% NPL rate, which the Governor said was being closely monitored by the Central Bank. The NPL rate for the non-banking sector was 7.9%, which had increased from 5.8% in March. The Governor insisted this was not a serious concern for the financial system but required close monitoring.