CBCG Governor and CEOs of banks on the implementation of the Decision on interim measures: Simplify procedures and communication with clients
20/03/2020
Governor of the Central Bank of Montenegro (CBCG), Mr. Radoje Žugić, and his associates held a meeting today with the CEOs of all commercial banks in Montenegro and the representatives of the Banking Association. The meeting was organised to provide necessary clarifications and agree on further steps in implementing the Decision on interim measures to mitigate the adverse impact of the new coronavirus on the financial system.
During the meeting, the attendees were informed that the conditions for implementing the Decision would start on Monday, 23 March 2020. They agreed that banks activate all available communication channels to inform citizens on no need to visit branches to apply for a moratorium.
“We appeal to citizens not to visit banks’ branches, and to comply with the recommendations of the Government of Montenegro and the Institute of Public Health. The application procedure will be simplified to the maximum with no need to visit branches to activate the moratorium. The citizens will submit their applications for moratorium activation electronically, i.e. by telephone or e-mail, as well as by registered mail,” informed the representatives of the CBCG and commercial banks.
The Governor thanked the banks for their willingness to share the burden of the new coronavirus pandemic, saying that the CBCG would provide them with all the necessary support.
“The CBCG and the commercial banks are at a common task - in these extraordinary circumstances, within their respective fields of competence, to facilitate the communication and implementation of measures adopted to mitigate the effects of the Covid-19 pandemic. The CBCG will fully support the commercial banks in implementing the Decision on interim measures through daily communication and continuous monitoring of the situation,” said Governor Žugić.
Once again, he reminded that banks’ liquidity of one billion euros is at a record level with no reason for fear and panic.
“My message to citizens is not to be concerned about their deposits - they are safe, and banks are sound, safe and highly liquid,” said Governor Žugic.
The banks’ representatives agreed with the concept of the Decision on interim measures, i.e. asking the loan beneficiaries to declare their use of the right to a moratorium. This shall affect the preservation of banks’ liquidity position, at the same time non-increasing the exposure of loan beneficiaries to the risk of contaminating with a coronavirus.
The Decision on interim measures to mitigate the adverse impact of the new coronavirus on the financial system sets out that all loan beneficiaries (legal entities, individuals, entrepreneurs and other loan beneficiaries) and/or users of all credit products, including credit cards approved by banks, have the right to a moratorium on loan repayment for up to 90 days.
This implies a temporary suspension of all payments of loan obligations - principal, interest, default interest, fees, etc. for up to 90 days. Pursuant to the Decision, banks are obliged, during the moratorium, to suspend all payments related to loan repayments (repayment of loans from transaction account held by loan beneficiary with the bank, standing orders for loan repayments, and the like).
It was pointed out that all loan beneficiaries who do not need a moratorium at the moment may exercise this right at any future time during the Decision’s validity, at the same time obliging banks to act on this request within five working days from the request receipt.
Moreover, during the moratorium, the banks must not calculate default interest on outstanding loan receivables, it shall not initiate enforcement proceedings or enforced collection, or take other legal actions to collect receivables, it shall not calculate past due days, nor reclassify loans to a lower classification category
Although banks will not collect interest receivable during the moratorium, they will calculate it and capitalise at the end of the moratorium duration. After the moratorium expiry, loan beneficiaries will continue to repay the loan for a period extended for the duration of the moratorium, following a new repayment plan that they will receive from the bank after the emergency circumstances have terminated. Banks will not make annexes to the loan agreement due to the introduction of a moratorium, which thereby reducing the need for physical attendance at the bank.
The Central Bank is preparing a detailed guideline for banks to implement the Decision properly, as well as a notice to loan beneficiaries how to exercise the right to use the moratorium.