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CBO instructs banks to continue COVID-19 relief for borrowers

13 Mar 2021

The Central Bank of Oman (CBO) has instructed the banks and finance and leasing companies operating in the sultanate to continue providing incentives and relief to borrowers affected by the COVID-19 pandemic and its negative impact on the economy.

The central bank has issued new instructions to the financial institutions following the announcement of incentives in the new Economic Stimulus Plan that was endorsed by His Majesty Sultan Haitham bin Tarik on Tuesday. 

Valuing the Royal Directives on banking incentives that were in full harmony with the government’s concerted efforts pertaining to the Economic Stimulus Plan, the CBO pledged its support to all national plans aimed to promote economic recovery amid the current circumstances.

In a statement to Oman News Agency, the CBO said it has instructed banks and finance and leasing companies to continue to grant a 12-month grace period for all existing and future laid-off borrowers, with effect from the date of termination of their services.

It also instructed banks and finance and leasing companies to postpone repayment of loans of low-income employees for an additional period of six months till the end of September 2021.

‘The deferment of loan repayment for these two segments has to be effected without imposing any type of interest fees during the grace period,’ the CBO statement said.

The central bank also instructed financial institutions to continue to postpone premiums and interest fees payable by the borrowers affected by circumstances posed by COVID-19 for a further six-month period till the end of September 2021, without having to impose interest fees against deferred interest or impacting the credit rating of those loans in any negative way.

As per the statement, the CBO has decided to go ahead with facilitation procedures capable of providing comfortable levels of cash liquidity in the banking sector. 

‘This will be in pursuance of the stimulus packages related to credit grants that include raising the ceiling of borrowing, facilitating lending to stricken sectors, cutting down percentages of protective capital and other procedures aimed to assist banks and finance and leasing companies to perform their role in supporting economic recovery and improving the levels of liquidity in the local market.’

The apex bank added that the overall aim (of the new measures) is to enhance the banks’ ability to continue to offer credit to various stricken sectors.

According to the statement, the CBO also decided to increase the maturity period and cut down interest percentage on the open market operation instruments including interest against re-purchase transactions, foreign currency exchange and other procedures.

The CBO affirmed that it will work in cooperation with the banks and finance and leasing companies to re-schedule loans to tally with new cash flows for borrowers to ensure their ability to meet their contractual obligations with financing institutions in line with emerging economic developments, without imposing fees against rescheduling.

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