CBN Issues Circular For Restructuring Of Credit Facilities Of Financial Institutions Impacted By Covid19
With the recent outbreak of the Coronavirus (Covid-19), The most certain issue has been the uncertainty of the longevity of the pandemic as there have been numerous opinions tilted to the fact that we might have to live with it, at least until a vaccine is available.
Perhaps one of the most telling narratives would be the lockdown that has been in effect since the 30th of March, which has crippled a substantial part of the country’s economic landscape. Educational, Social and Business enterprises have been put on a compulsory hold, with the exception of essential workers. A number of sectors have taken shrewd steps to limit the impact and the effect of the virus on what they control, especially sectors related to the economy of the country.
In view of the unprecedented circumstances, the Central Bank of Nigeria, on the 27th of May, 2020, released a circular through her Financial Policy and Regulation Department to all other financial institutions in the country to help maintain their monetary and financial stability. In a letter titled – REGULATORY FORBEARANCE FOR THE RESTRUCTURING OF CREDIT FACILITIES OF OTHER FINANCIAL INSTITUTIONS IMPACTED BY COVID-19. In this circular, the CBN lists policy several policy measures to address the effect of the pandemic on the Nation’s economy. These policies would also help to mitigate the harshness of the outbreak on households, businesses and financial institutions. They include;
- CBN intervention facilities availed through participating OFI’s are granted a further one-year moratorium on all principal repayments effective from March 1, 2020.
- Interest rates on CBN intervention facilities through participating OFI’s hereby reduced from 9% to 5% per annum for one year effective from March 1, 2020.
- Other Financial Institutions (OFI’s) are granted leave to consider temporary and time-limited restructuring of the tenor and loan terms of households and businesses affected by Covid-19, subject to the recently issue guidelines for restructuring affected credit facilities in the OFI sub-sector.
The outbreak of the pandemic has resulted to disruptions in global economy supply chains, within and outside many countries and of course, Nigeria is not different. The general lockdown has resulted to a drop in global crude oil prices, and financial turmoil in markets and financial institutions. This has led the CBN to take proactive steps to control the economic strain of the effects of the lockdown by enacting relevant policies to restructure credit and loan facilities across various financial institutions in the country.
Households and other medium scale enterprises constitute around 90% of the country’s economic landscape, as such, they are prone to be hard hit by the effect of the pandemic, which would affect the country’s economic standpoint on a larger scale, but with the latest policies, it is hoped that the harshness of the pandemic would be possibly reduced to its barest minimum.
Read the circular here
Timi Ilori is a graduate of Law from Obafemi Awolowo University with vested interest in Criminal, Business and International Trade Laws. He is an avid reader and writer, with a unique blend of poetic artistry and communications industry.
