• Sunday, May 19, 2024
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Covid-19: CBN grants banks leave to temporarily restructure loan terms for businesses, households

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The Central Bank of Nigeria (CBN) has granted all commercial lenders leave to consider temporary and time-limited restructuring of the tenor and loan terms for businesses and households most affected by the outbreak of Covid-19 particularly Oil & Gas, Agriculture, and manufacturing.
The CBN said it would would work closely with the lenders to ensure that the use of this  forbearance is “targeted, transparent and temporary, whilst maintaining individual DMB’s financial strength  and overall financial stability of the system.”
The CBN also established a N50bn facility through the NIRSAL Microfinance Bank for households and small- and  medium-sized enterprises (SMEs) that have been particularly hard hit by Covid-19, including but not limited
to hoteliers, airline service providers, health care merchants, among others.
These are part of the six immediate policy measures the CBN announced on Monday to help combat the impact of the Covid-19 scourge on the economy.
The new policy measures come ahead of the next week’s Monetary Policy Committee of the CBN which according to Emefiele, there would be decisions on whether to cut benchmark rates or not.
But the CBN equally slashed Interest rates on all its applicable intervention facilities from 9 to 5 percent per annum for one year effective March 1, 2020.
Announcing these policy measures at an emergency press conference on Monday, Governor Godwin Emefiele said the ravaging coronavirus scourge had presented impetus for the CBN to provide support for affected households, businesses, regulated financial institutions, and other stakeholders in order to cushion the adverse economic impacts of the coved-19 pandemic.
“All CBN intervention facilities are hereby granted a further moratorium of one year on all principal repayments, effective March 1, 2020. This means that  any intervention loan currently under moratorium are hereby granted additional period of one year,” Emefiele equally announced.
“Accordingly, participating financial institutions are hereby directed to provide new amortization schedules for all beneficiaries,” he directed.
Covid-19 pandemic has already led to unprecedented disruptions in global supply chains, sharp reduction in crude oil prices, turmoil in global stock and financial markets, widespread cancellations of entertainment and business events, lockdown of large movements of persons in many countries, and  intercontinental travel restrictions across critical air routes in the world.
These outcomes have had serious adverse implications for key sectors including but not limited to oil and gas, airlines, manufacturing, trade and consumer markets.
To meet potential increase in demand for Healthcare services and products, the CBN has also opened for its intervention facilities, loans to pharmaceutical  companies intending to expand/open their drug manufacturing plants in Nigeria, as well as to Hospital and Healthcare practitioners who intend to expand/build the  Health facilities to first class centres.
“This is in addition to growing the size of existing interventions to the  Agricultural and Manufacturing sectors in Nigeria,” the governor stated.
He said in view of the success of the CBN Loan to Deposit Ratio LDR Policy in growing credit to the economy and reducing interest rates, the CBN  would further support industry funding levels to maintain DMBs’ capacity to direct credit to individuals, households, and businesses.
Emefiele explained that the CBN will also consider additional incentives to encourage extension of longer tenured credit facilities. DMBs are encouraged to continue to build capital buffers in order to improve resilience of the sector.
“The Bank stands ready to provide liquidity backstops as and when required in view of its role as Banker to the Federal Government and lender of last resort.
“The CBN shall continue to monitor developments and will issue further updates as may be appropriate,” he further assured.