The Banking Supervision Department announces the expansion of the comprehensive framework for deferring loan payments
- In May 2020, the Banking Supervision Department announced a comprehensive framework that was adopted by the banking system for deferring loan repayments, as assistance to bank customers in dealing with the ramifications of the coronavirus crisis.
- In March–June 2020, the banks deferred loan repayments for approximately 553,000 customers in all activity segments, at a total value of approximately NIS 7 billion.
- With the goal of continuing to assist customers in dealing with the case flow difficulties due to the ramifications of the coronavirus crisis, while managing risks in an informed and responsible manner, the Banking Supervision Department announced an extension and expansion of the previous framework for deferring loan repayments, as follows:
o Regarding mortgages, consumer credit and business credit: The period for submitting a request for a deferral of loan repayments will be extended to October 30, 2020.
o Mortgages: Customers who have already received a deferral of mortgage repayments will be able to defer the payments until the end of 2020, even if the deferral exceeds 6 months. Customers who have not yet deferred mortgage repayments, and ask to do so, will be able to defer the payments for 6 months.
o Consumer loans up to NIS 100,000: Customers will be able to defer such loans for up to 6 months (at the customers’ choice) without the bank’s judgment, as opposed to the previous framework in which the deferral was for 3 months.
- We emphasize that the framework that was formulated presents the minimum terms for deferring the loans, and each bank may expand it for the benefit of its customers and at their request.
- The Banking Supervision Department will continue to follow closely the developments and the dynamic ramifications of the crisis, and will examine additional ways to assist households and businesses.
Governor of the Bank of Israel, Prof. Amir Yaron, said, “We are working and we will continue to work with all the tools available to us in order to support the economy and economic activity at the background of the crisis. The extension of the framework for deferring loans allows some additional breathing space and will make it easier for households and businesses that were adversely impacted to endure the crisis period. However, it should be recalled that credit is not a grant, and it has to be paid back, and the borrower has to consider the various aspects of the deferral. The expansion of the framework for deferring loans comes in parallel with the government assistance plan to provide maximum certainty to those who have been negatively impacted.”
Supervisor of Banks Yair Avidan said, “We all see that many households and businesses continue to be impacted by the ramifications of the coronavirus crisis and therefore those customers have to continue being assisted, with informed and responsible risk management. The resilience of the overall public is built on the resilience of the individuals that comprise it, and the expansion of this framework can strengthen the resilience of private individuals. I commend the banking system on the expansion of the framework, out of an understanding and readiness to continue accompanying the customers during this challenging time, with flexibility and sensitivity. We will continue to follow the developments and to examine additional ways to make things easier and to provide tools for dealing with the difficulties that many households and businesses are forced to deal with each day.”
As households and small businesses are still dealing with the economic ramifications of the coronavirus crisis, which include, among other things, a decline in income and accordingly difficulty in repaying the loans that were taken out prior to the outbreak of the crisis, the Banking Supervision Department announces the expansion of the uniform framework for deferring loan repayments, the goal of which is to assist households and small businesses with cash flow difficulties.
The goal of the expanded framework is to assist those who deferred payments in the past and require additional “oxygen” to get through the difficult period, but they also bear the responsibility to prepare for meeting their obligations in the future. It is also intended to assist the public that so far has succeeded in meeting its obligations and not deferring payments, to know that it has the possibility of using the framework in that manner and to ease its cash flow as needed.
The formulation of the framework by the Bank of Israel was carried out while examining the steps and practices common around the world in this issue, both from the perspective of the time span given to submit a loan deferral request and from the perspective of the length of the deferral and the related terms.