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Sri Lanka central bank announces credit relief for third Coronavirus wave

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ECONOMYNEXT – Sri Lanka’s central bank has announced credit relief as a third Coronavirus wave gripped the country involving restructuring performing loans on request at Treasury bill plus one percent.

“With the outbreak of the third wave of COVID-19 in Sri Lanka, requests from many concerned parties and Government Authorities were received by the Central Bank of Sri Lanka (CBSL) to consider granting certain concessions to the affected borrowers/customers,” the regulator said.

“Further, licensed banks may offer additional concessions to businesses and individuals affected due to the third wave of COVID-19, on their request, in a way that the overall benefits to the borrower/customer are not less than the benefits offered under this Circular.”

The full statement report is reproduced below

CONCESSIONS FOR COVID-19 AFFECTED BUSINESSES AND INDIVIDUALS

With the outbreak of the third wave of COVID-19 in Sri Lanka, requests from many concerned parties and Government Authorities were received by the Central Bank of Sri Lanka (CBSL) to consider granting certain concessions to the affected borrowers/customers.

Accordingly, with a view to meeting the challenges faced by businesses and individuals due to the third wave of COVID-19, CBSL requests licensed commercial banks and licensed specialised banks (hereinafter referred to as licensed banks), to extend the following concessions to COVID-19 affected businesses and individuals (hereinafter referred to as the Scheme).

Further, licensed banks may offer additional concessions to businesses and individuals affected due to the third wave of COVID-19, on their request, in a way that the overall benefits to the borrower/customer are not less than the benefits offered under this Circular.

Accordingly, this Circular is issued to give effect to the Scheme in a consistent manner across all licensed banks, with a view to easing the burden on the borrowers of banks that are affected by the current disruption in business /income generating activities to duly repay their loans.

1. Deferment or restructuring of existing credit facilities in the performing category as at 15 May 2021

(a) Licensed banks shall defer recovery of capital, interest, or both of the existing credit facilities of borrowers who are affected by the third wave of COVID-19, on case-by-case basis, during the period up to 31 August 2021, considering the financial difficulties faced by the eligible borrowers, such as loss of job, loss or reduction of income/salaries or sales, closure of business, etc.

(b) The deferment of capital, interest or both shall be granted for one or more of the existing credit facilities granted in Rupees or in foreign currencies, considering the financial difficulties and repayment capacity of the eligible borrowers.

(c) In the case of any Rupee facilities considered for the above deferment, licensed banks may charge an interest rate not exceeding the 364-days Treasury Bills auction rate as at 19 May 2021 plus 1 per cent per annum (i.e., 5.18% + 1% = 6.18% p.a.), for the deferred period and only on the amount deferred amount. In the case of foreign currency loans, licensed banks may charge a concessionary interest rate considering the prevailing low interest rates.

(d) Alternatively, licensed banks may restructure the existing credit facilities over a longer period, considering the repayment capacity of the borrower and an acceptable revival plan. In this case, the licensed bank and the borrower shall agree on an interest rate, considering the prevailing low interest rates.

(e) Licensed banks shall extend the due dates of revolving credit facilities, including but not limited to facilities such as working capital, pawning, temporary overdrafts, short-term trade finance facilities, etc., during the period up to 31 August 2021, provided such due dates fall during 15 May 2021 to 31 August 2021. Licensed banks may charge interest for the deferred period and only on the amount deferred amount as stated in I (c) above.

(f) Penal interest shall not be accrued or charged during the concessionary period, i.e., 15 May 2021 to 31 August 2021.

(g) Licensed banks shall accommodate any request from affected borrowers to delay the due dates of loans repayment by few days (maximum 10 working days) due to the ongoing travel restrictions, without deferring or re-structuring such facilities. Licensed banks shall not charge any additional interest or other charges for such delay.

(h) Borrowers who are currently enjoying deferment of lease repayments under Circular No. 03 of 2021 issued on 13 March 2021 or moratorium under Circular No. 04 of 2021 issued on 19 March 2021 are not eligible for concessions provided above.

2. Concessions for credit facilities in the non-performing category as at 15 May 2021

(a) Licensed banks may reschedule the existing non-performing credit facilities as at 15 May 2021, over a longer period, considering the repayment capacity of the borrower and an acceptable revival plan. In this case, the licensed bank and the borrower shall agree on the terms and conditions including the interest rate.



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Business

CSE planning new product lines to attract investors in greater numbers

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By Lynn Ockersz

The CSE is planning to attract a greater number of investors to the stock market this year through the introduction of some new product lines. In order to increase the choice of instruments available to equity investors, the CSE intends to focus in the immediate term on instruments, such as, stock borrowing and lending and regulated short-selling, CSE CEO Rajeeva Bandaranaike said.

The latter instruments would help in generating more liquidity and trading among equity investors, not only in instances when the market is on its way up but also in a declining market as well, CEO Bandaranaike told The Island Financial Review in an exclusive interview recently.

The CEO also said that the CSE is aiming at leveraging the corporate debt market through the initiation of some new products. For example, Green Bonds, Perpetual Bonds and the facilitation of secondary trading of corporate bonds via repo trading.

Asked to indicate as to how these instruments would help the bourse going forward, Mr. Bandaranaike said that stock borrowing and lending, for instance, would facilitate and enable regulated short selling which will have the effect of increasing liquidity and trading among all categories of equity investors.

This will create opportunities for traders to make use of market volatility. Besides, investors holding long term portfolios could lend their stock and earn an interest with least effort on their part.

Asked to elaborate on the importance of Green Bonds, the CEO said that institutional investors in particular are currently focusing on ESG projects; that is, investors that are sensitive to environmental, social and governance concerns. Accordingly, the CSE would be catering to some important investor needs through the latter projects.

Meanwhile, in response to the question on how the digitization initiatives of the CSE have helped in ushering a more robust share market in Sri Lanka, CSE’s Chief Information Officer Chandrakanth Jayasinghe said it is the aim of the CSE to give progressive digital exposure to investors. There are two dimensions to be considered here the CIO said. First, more and more important features have been added to the CSE’s digital mobile App over the last two years.

The CIO added: ‘A revamped mobile App is now at hand to enable quicker and informed investment decisions. All the information required by the investor is now available via this App to enable him to enter the market. For example, we are linked to the Department of Registration of Persons. Digital on-boarding and digital signing etc have been enabled via the app. On a full digital basis investors can now interact with the CSE.

‘The investor is now connected to the CDS E-Connect via the CSE and the investor could access his/her stock portfolio, for instance, and access his/her monthly statements. They could also make changes to their profiles such their address changes via the mobile App. Research reports of brokers could be accessed by the same means, nominations could be effected through the same mechanism. It’s a total change: a 360-degree info hub has been created through the App.

‘Secondly, the CSE is a more agile digital organization. For instance, most of our back-end functions are fully robotized. AI is used in many operations. We use AI for compliance operations.

‘We are saddled with very much less paperwork. Over 90% of all account openings are effected through our mobile App. Most paper-based formalities have been done away with.’

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SriLankan Airlines unveils new and improved mobile App

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SriLankan Airlines has unveiled a new and improved mobile app that is designed for optimum user-friendliness. The enhanced app will afford customers greater ease and flexibility in managing their flight bookings, purchasing value-added services, enrolling for a FlySmiLes account and performing a variety of other tasks.

The new app provides greater autonomy for Customers through added features that are exclusive to the app. Customers will be able to choose their in-flight meal; reserve seats; change travel dates and sectors; buy value added services such as excess baggage, travel insurance and duty-free items; and check-in for flights well in advance.

The ability to manage flight bookings, even while on the move, remains entirely with passengers who will be empowered to exercise greater control in shaping their journey independently and dynamically. Customers’ in-app experience is inclined to be further enhanced with the new ‘My Trips’ feature. My Trips will organize and present important information that a customer requires for an upcoming flight in a timely fashion on the app’s homepage.

The homepage includes other up-to-minute information on the flight schedule and allows users to search and stay on top of the departure and arrival times of flights. Customers can also stay updated and not miss out on the latest deals and promotional fares.

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Business

Brandix Manusathkara Thilina 2022

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Brandix Apparel Ltd., gave hope to 16,824 children of the Brandix family by gifting them school essentials including stationery and schoolbags necessary for the new school year, under its ‘Manusathkara Thilina’ 2022 initiative recently.

 Understanding the current need to support our team members, especially during the current crisis of rising stationery costs, the children of 10,933 Brandix Associates were recipients of Brandix’s unstinting efforts to inspire and support education for all. The 2022 programme is being held for the 7th consecutive year where children from pre-school to Grade 13 received stationery packs.

Malika Samaraweera, Group Head of Corporate Social Responsibility at Brandix Apparel noted, “The beginning of the new school year is eagerly anticipated and exciting for all students. However, we realise that our employees, who are the backbone of our enterprise, are facing a daunting challenge to provide their children these essential items. We firmly believe in taking care of our communities and this year’s Manusathkara Thilina programme ensures these children have the tools and opportunity to learn and grow.”

 Begun in 2016, the Manusathkara School Essentials initiative seeks to drive home the importance of education among the children of Brandix employees. To-date, over 37,000 children have benefitted from the programme. The educational hampers gifted to the children comprise of stationery and other school necessities, enabling their success for the foreseeable future.

With the aim of driving social sustainability, the inspired team at Brandix continues their work towards Equal Opportunity and the Right to Education for All. Recognising that today’s challenges are wide-ranging and incredibly tough for many families, the school essential packs will enrich the lives of the beneficiary children and sustain their school education.

Supporting Sri Lanka’s aspiring youth towards continuity in their education, Brandix has also initiated an annual scholarship scheme under its ‘Manusathkara University Scholarship’ programme. Children who are high performers in the Advanced Level Examinations within the Brandix Model Villages are awarded scholarships to pursue their higher education and contribute towards Sri Lanka’s future workforce. The ‘Model Village’ concept was developed by Brandix to support the wellbeing of communities within a 10km radius of the company’s facilities.

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