A new set of CBCG measures to the most endangered ones


22/10/2020

At the meeting, held today, the Council of the Central Bank of Montenegro chaired by Governor Mr Radoje Žugić adopted the Decision Amending the Decision on interim measures to reduce adverse effects of the new Coronavirus outbreak on the financial system after mitigating measures to protect population against communicable diseases. The Decision implements the fifth set of the CBCG measures aimed at rehabilitation of negative pandemic consequences.


The adoption of the Decision created conditions to alleviate the financial situation of specific population groups that are or in the coming period will be significantly affected by the COVID-19 pandemic. These are natural persons who have lost or will lose their jobs and whose earnings have been or will be reduced.


The first measure refers to the introduction of a mandatory moratorium for six months aimed at natural persons. It applies to loan beneficiaries who lost jobs on 31 March 2020 or later as a result of the COVID 19 epidemic. It applies to persons who were not past due in loan repayment for more than 90 days on 31 December 2019, and their loan was not classified as non-performing assets on that day. The introduction of a moratorium also applies to loan beneficiaries with microfinance institutions and leasing companies.


The second measure implies that banks have to approve loan restructuring at the request of natural persons - borrowers whose salaries have been reduced by at least 10% due to the pandemic consequences on their employers' operations and to extend the repayment period. Persons whose net salary before the reduction was 550.00 euros (just above the average wage in Montenegro) or more, may restructure loan if the available amount of that person remained less than 220.00 euros (the minimum wage in the country) after reducing the salary and repaying the loan instalment. Through restructuring, the loan repayment period for this category will be extended so that the unencumbered part of the salary, after the changed loan repayment schedule, will not amount to 220.00 euros. For loan beneficiaries categories whose net salary before the reduction was below 550.00 euros, the loan repayment period will be extended so that the amount of unencumbered part of the salary, after changing the loan repayment schedule, amounts less than its unencumbered salary reduction. The bank bears all costs related to creating a new loan repayment plan (loan processing, the conclusion of annexes to the collateral agreement, certification of the agreement, etc.).


The third measure of the adopted Decision allows the banks to include 20% instead of 30% of demand deposits in the calculation of these liabilities when calculating due liabilities based on the Decision on minimum standards for liquidity risk management in banks. In this way, banks are enabled to manage their funds more efficiently.