Over 0.3 million customers availed deferred loan payments: SBP

KARACHI: The State Bank of Pakistan (SBP) has said that customers are increasingly seeking relief using the deferred payment facility of loans from their banks for one year.

The central bank said, as of April 30, the number of bank customers that availed deferred payment of loans has grown to 303,000 borrowers amounting to Rs236 billion. The majority of them were small borrowers who were provided relief in repayment of installments against personal loans, auto, housing finance and credit cards. 

2/2 The majority of the beneficiaries are small borrowers. Borrowers who wish to avail this package are encouraged to read details of this scheme at our website and contact their bank. For details: https://t.co/mDIefDPJOk

— SBP (@StateBank_Pak) May 1, 2020

The State Bank of Pakistan introduced the scheme in March after which a significant number of customers approached their banks. In the first two weeks, banks could facilitate 80,000 customers whereas the number of borrowers surged to over 300,000 in the next two weeks.

The relief in repayment of loans was announced for conventional banks but later the central bank came with a similar scheme for Islamic banks. There have been complaints from customers that banks did not provide relief but imposed fine or other charges.

According to the scheme, bank customers that availed auto and housing finance, personal loans, and credit cards can pay their principal amount after one year, whereas they have to pay interest payment or spread now. The relief will be given to borrowers who have been paying their installments regularly till December 2019.

The central bank issued a comprehensive relief package for households and businesses to manage their finances through the temporary phase of disruption. According to the scheme, banks and development finance institutions (DFIs) will defer the payment of principal on loans and advances by one year. To avail this relaxation, borrowers should submit a written request to the banks before 30th June 2020.

Banks will continue 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 or rescheduled in the credit bureau’s data. The total amount of principal coming due over the next year is about Rs4,700 billion.

SBP has relaxed the regulatory criteria for restructuring of loans for borrowers whose financial conditions require relief beyond extension of principal repayment for one year. The loans that are restructured within 180 days from the due date of payment will not be treated as defaults while banks would also not be required to suspend the unrealised mark-up against such loans.