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CBO asks banks to extend grace period on loan repayments

6 Oct 2021 CBO grace period By OUR CORRESPONDENT

Muscat – The Central Bank of Oman (CBO) on Tuesday issued a number of directives to all the banks and finance leasing companies (FLCs), including the announcement of a stimulus package of procedures and incentives, aimed at containing the economic impact of the pandemic on the lives of borrowers.

Taking into account the current economic scenario and in continuation of previously issued instructions, the CBO has issued further directives to banks and FLCs to extend the grace period for repayment of loans.

For Omani citizens laid-off from work, the deferment of loan instalment and interest will be extended until December 31, 2022 or until the borrower concerned obtains another job, whichever is earlier, with the suspension of charging any interests during the deferment period.

For Omani employees with reduced wages, loan instalments, interests or profits of all affected borrowers of this category has been postponed until December 31, 2021, with the suspension of charging any interests during the deferment period.

For pensioners from the public and private sector, banks shall continue to modify the terms of repayment of existing personal loans/finance, so that the maximum debt service ratio does not exceed 30 per cent of the monthly pension if it is equal to or less than RO1,500 and 35 per cent if the monthly pension is more than RO1,500.

For Riyada card holders, banks and FLCs shall continue to postpone the instalments, interests/profits due from them until the end of December 31, 2021. The lending institutions and the borrower should mutually work out before the end of this period to restore the normal repayment schedule or to reschedule the loans according to the expected cash flows of the borrowers concerned.

The CBO emphasised that it is necessary for the borrowers, especially the companies which previously benefited from these procedures, to take into account the importance of reassessment of their financial conditions, before the expiry of the grace period on December 31, 2021. ‘Accordingly, it is advised that the entities falling under this category shall work with their lenders to plan and reschedule their loan payments.’

The CBO on Monday also announced the allocation of RO7mn for the welfare of people affected by the Cyclone Shaheen. The amount will be collected from the fee income received by the CBO and banks over the next five months.

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