BoN’s Covid relief measures amended
The Bank of Namibia (BoN) has amended some key provisions of the Determination on Policy Changes in Response to Economic and Financial Stability Challenges to avoid the premature exit of Covid-19 relief measures.
Jo-Maré Duddy – The loan repayment moratorium provided in the Bank of Namibia’s pandemic relief policy has been revised from the current six to 24 months to a period of one to 24 months, removing any inconsistent treatment of moratoria of less than six months.
The central bank on Friday said it has “proactively” decided to amend some key provisions of the Determination on Policy Changes in Response to Economic and Financial Stability Challenges, also known as BID-33. The Bank of Namibia (BoN) implemented BID-33 on 1 April 2020 to deal with and mitigate the risks to the economy as a result of the Covid-19 pandemic.
BID-33 has been revised to remain in place for an additional twelve months, until 1 April 2023. This presents an effective period of 36 months as opposed to the initial 24 months to support businesses and individuals from the adverse and negative effect of Covid-19 unless the determination is revoked in writing, the BoN said.
“The bank is committed to ensure that no early withdrawal of the Covid-19 relief measures would be considered without due assessment and analysis of the potential impact on the banking industry, individual households and businesses,” BoN governor Johannes !Gawaxab said.
The factors that necessitated the amendments include the ongoing macroeconomic strain and the uncertainty surrounding emerging Covid-19 variants and their concomitant impact on the economic activities at large, which continue to delay economic recovery, !Gawaxab said.
“Whilst banking institutions remain adequately capitalised and profitable, prolonged economic distress, beyond the initially considered timelines, require amendments with respect to remedial measures,” he added.
PUNITIVE MEASURES
Banking institutions are not allowed to charge clients higher, punitive interest rates, in excess of the initial contractual interest rate, following the expiration of any Covid-19 related loan moratorium imposed, !Gawaxab said.
“Similarly, banking institutions are only allowed to charge an administrative fee of the extension of a loan moratorium at the initial extension, whereafter no administrative fee or charge for the rollover of the facility may be charged to a customer,” he added.
To ensure that banking customers are not unduly impacted by negative credit bureau listing as a result of the implementation of BID-33, banking institutions, as credit providers, should not report those benefitting from a loan moratorium rolled over for less than 12 months as delinquent to credit bureaus, !Gawaxab stipulated.
The BoN believes that the changes to the Covid-19 relief measures on the banking industry and its customers will enable banking institutions to better play their role in supporting the economy and their customers during these challenging circumstances, he said.
The central bank will continue to closely monitor developments and response of banking institutions to these measures in order to ensure and maintain a sound monetary and financial system in Namibia amid economic challenges posed by Covid-19 outbreak, !Gawaxab concluded.
The central bank on Friday said it has “proactively” decided to amend some key provisions of the Determination on Policy Changes in Response to Economic and Financial Stability Challenges, also known as BID-33. The Bank of Namibia (BoN) implemented BID-33 on 1 April 2020 to deal with and mitigate the risks to the economy as a result of the Covid-19 pandemic.
BID-33 has been revised to remain in place for an additional twelve months, until 1 April 2023. This presents an effective period of 36 months as opposed to the initial 24 months to support businesses and individuals from the adverse and negative effect of Covid-19 unless the determination is revoked in writing, the BoN said.
“The bank is committed to ensure that no early withdrawal of the Covid-19 relief measures would be considered without due assessment and analysis of the potential impact on the banking industry, individual households and businesses,” BoN governor Johannes !Gawaxab said.
The factors that necessitated the amendments include the ongoing macroeconomic strain and the uncertainty surrounding emerging Covid-19 variants and their concomitant impact on the economic activities at large, which continue to delay economic recovery, !Gawaxab said.
“Whilst banking institutions remain adequately capitalised and profitable, prolonged economic distress, beyond the initially considered timelines, require amendments with respect to remedial measures,” he added.
PUNITIVE MEASURES
Banking institutions are not allowed to charge clients higher, punitive interest rates, in excess of the initial contractual interest rate, following the expiration of any Covid-19 related loan moratorium imposed, !Gawaxab said.
“Similarly, banking institutions are only allowed to charge an administrative fee of the extension of a loan moratorium at the initial extension, whereafter no administrative fee or charge for the rollover of the facility may be charged to a customer,” he added.
To ensure that banking customers are not unduly impacted by negative credit bureau listing as a result of the implementation of BID-33, banking institutions, as credit providers, should not report those benefitting from a loan moratorium rolled over for less than 12 months as delinquent to credit bureaus, !Gawaxab stipulated.
The BoN believes that the changes to the Covid-19 relief measures on the banking industry and its customers will enable banking institutions to better play their role in supporting the economy and their customers during these challenging circumstances, he said.
The central bank will continue to closely monitor developments and response of banking institutions to these measures in order to ensure and maintain a sound monetary and financial system in Namibia amid economic challenges posed by Covid-19 outbreak, !Gawaxab concluded.
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