Forced repossession of leased assets to be suspended until next year

The Central Bank says the Parate Execution and forced repossession of leased assets up to March 31, 2022, for pandemic-affected borrowers will be suspended without delay.

CBSL Governor Ajith Nivard Cabraal revealed this unveiling the ‘Six-Month Road Map for Ensuring Macroeconomic and Financial System Stability’ this morning (October 01).

“We have recognized that special circumstances have made it imperative that we provide that space,”  Cabraal said the banks will be encouraged to adopt other methods to persuade the payments during this period.

Speaking on the Central Bank’s ‘to-do-list’ on the financial sector concerns, he said liquidity support of up to Rs. 15 billion will be provided to finance interest accrued in loans that have been given the moratorium so that the financial institutions could deal with the moratorium effect in a sustainable manner.

Cabraal noted that a lot of businesses are now under pressure as they have to pay the old loans and old interests as well as new loans and new interests, adding that the modalities for the provision of liquidity support will be worked out in due course.

He also stated that they plan to unwind moratoria gradually and devise long-term plans to support businesses affected by the pandemic-related lockdown.

Meanwhile, a comprehensive plan is also expected to be implemented to deal with the six failed finance companies and actively pursue the revival of those that could be revived with new investment.

For this purpose, the Central Bank is currently reviewing the nonbank financial institutions (NBFIs) whose finance business license has been suspended or cancelled, to assess the way forward.

If such NBFI is considered possible to be revived, plans will be devised to enable infusion of capital investment for revival, subject to a feasible business plan. Further, necessary interventions will be made in the court proceedings based on the respective plans of action.

Speaking further, the CBSL governor said they will make sure that all financial institutions develop ‘post-COVID’ revival units as there will be special issues that those businesses will encounter. “We want to make sure that those businesses survive.”