Banks and DFIs have deferred principal loan payments amounting to Rs 236 billion under relief package announced for borrowers and customers in the wake of COVID-19 pandemic.
A comprehensive relief package for borrowers and customers of the banking sector was announced by the State Bank of Pakistan (SBP) in collaboration with Pakistan Banks Association (PBA) on March 26, 2020 to provide some financial relief to borrowers to cope with the impact of COVID-19 pandemic.
Under the relief package for customers and borrowers, banks and DFIs were agreed to defer the payment of principal on loans and advances by one year to facilitate borrowers in COVID-19 crisis. However, the borrowers will be required to service the mark-up amount as per agreed terms and conditions.
The deferment of principal will not affect borrower's credit history and such facilities will also not be reported as restructured/rescheduled in the Credit Bureau's data. As per banking sector estimates, the total amount of principal coming due over the next year is about Rs. 4,700 billion.
Accordingly, bank borrowers and customers were asked to submit a written request to the banks before 30th June 2020 to avail this relaxation. Banks and DFIs have received a very encouraging response from borrowers as more and more borrowers are approaching and benefiting from relief package for extension of principal repayments by one year.
According to latest data, as of 24 April 2020, approximately 303,000 borrowers have been able to defer their principal loan payments. In terms of value the total deferred amount is about Rs 236 billion. The majority of beneficiaries of this relief package are small borrowers.
Banks say that borrowers who wish to avail this package will be encouraged and may contact their respective bank to avail this facility.
Banking industry expects that these measures will help households and businesses in dealing with financial problems arising due to COVID-19. The SBP has already said that it will keep monitoring the economic situation and credit conditions faced by households and businesses closely and stand ready to take additional needed measures in coordination with PBA to steer the economy during this period of temporary disruption.
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