·         Due to the ramifications of the COVID crisis and the closure imposed by the Israeli government with the aim of dealing with the pandemic, customers of the banks and credit card companies have encountered economic difficulties that are partly reflected in a decline in income, which leads to difficulties in repaying loans they took out prior to the crisis.

·         In order to assist customers of the financial system, a voluntary outline has been formulated for the deferral of loan repayments, which was adopted by all of the credit card companies.  The outline will take effect in the next few days, and by October 16 at the very latest.  This outline is in addition to the Banking Supervision Department’s announcement on expanding the comprehensive outline for deferral of loan repayments that was adopted by the banking system, which enables customers to defer loan repayments in three activity segments: mortgages, consumer credit, and credit to businesses.

·         The deferral of payments relating to consumer loans and loans to businesses, will take the following form:

o   Consumer loans: For loans of up to NIS 100,000.  The deferral will be for a period of 3 months, without the company’s discretion.  In addition, the company has the option, at its discretion, to provide an additional 3-month deferral for such loans (up to a total of 6 months).  The deferral that is not subject to the company’s discretion is on the principal component of the loan.  The credit card company is permitted to also allow a deferral of the interest in addition to the principal.

o   Loans to businesses: For a business with annual turnover of up to NIS 25 million, which has been adversely affected by the crisis, a deferral will be allowed for up to 3 months, at the credit card company’s discretion.

 

This outline comes in addition to various leniencies, including payment deferrals, that have already been granted by the credit card companies, and represents the minimum conditions for deferring loan repayments.

 

It is emphasized that a deferral comes with costs, and should be used only as necessary.  In any case, before making a decision to defer payments, it is important that the customer examine the implications of the deferral, including its economic cost (in terms of interest, the amount of the monthly payment following the deferral, and so forth), in order to make an informed decision.

 

Supervisor of Banks Yair Avidan said, “The formulation of the outline adopted by the credit card companies is a further milestone in the broad assistance being provided, with the encouragement of the Banking Supervision Department, to customers of the banks and credit card companies with the aim of helping them deal with the ramifications of this complex period.  Since the beginning of the crisis, the credit card companies have taken various initiatives to help their customers deal with the ramifications of the crisis, and I welcome the formulation of a uniform and comprehensive outline that is consistent with the characteristics of the credit card companies and that will help customers deal with cashflow difficulties.  The Banking Supervision Department will continue in its task to help customers get through this period with as little damage as possible, and will examine additional measures to achieve this goal, through informed and responsible risk management.”

 

Outline for loan repayment deferrals by the credit card companies

 

 

Customer group

Deferral period

Last date for requesting a deferral

Spread of payments

Maximum interest rate

Fee

Consumer credit up to NIS 100,000*

Customers who pay off their loans as required.

 

The deferral shall be on the principal with no company discretion.  The company is permitted to also allow a deferral of the interest payments in addition to the principal.

3 months.

 

In addition, there is an option for a further 3-month deferral (up to 6 months total), at the credit card company’s discretion.

 

December 31, 2020

Payments are added at the end of the loan period***

The interest rate in the original loan agreement.

The deferral will be made without charging a fee.

Business credit

A business with annual turnover of up to NIS 25 million, that has been adversely affected by the crisis.

 

The loan has been paid back in an orderly manner, and the business is expected to get through the crisis and be able to meet its loan repayments following the crisis.

Up to 3 months, at the credit card company’s discretion.

 

Clarifications:
* Excluding loans in commercial collaboration with a third party.

** The spread of loan repayments is subject to technical restrictions resulting from the bank’s computer system.  If necessary, alternative solutions for the distribution mechanism will be suggested.

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