Central Bank extends loan repayment holiday until June

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The Central Bank of Cyprus has approved a new loan repayment moratorium until the end of June to mitigate the impact of a new three-week lockdown to prevent the spread of COVID-19.

The new payment holiday, also approved by the Cabinet, is extended to borrowers who did not utilize the 2020 payment holiday that ended in December as well as those who obtained a moratorium but didn’t utilize the nine-month duration.

Eligible borrowers are those who had arrears of less than 30 days at the end of December.

In a statement, the CBC said: “The loan repayment moratorium is targeted to support the liquidity of businesses and households which will face the biggest short-term liquidity problems due to the pandemic.”

It said support would also be given to vulnerable groups whose obligations are collateralized by primary residence worth up to €350,000.

The new repayment moratorium will be enforced with a Decree to be issued by the Finance Minister.

The CBC said it “continues to closely monitor the developments in the economy fully aware of the impact of the pandemic.”

“To alleviate the impact on businesses, households and the banking sector to safeguard and strengthen the financial stability of the country, the CBC decided to provide its consent to the Finance Ministry for a loan repayment moratorium to financial corporations in the framework allowed by the European Banking Authority Guidelines.”

CBC also decided to extend the relaxation of loan origination criteria until end-March to enable easier access to short-term credit to businesses and households thus providing access to liquidity needed to cover their current obligations.

The relaxation of loan origination criteria concerns evaluation of the borrower’s repayment capacity and the necessary documentation which they are obliged to provide the banks, aiming to speed up procedures.