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Loan Repayment Relief Period Extended: A-G

Speaking in Parliament, he said the repayment relief was given for principal repayments, and in certain cases principal interest were deferred.
03 Sep 2020 12:14
Loan Repayment Relief Period Extended: A-G

Financial institutions have agreed to extend the loan repayment relief for their respective customers until December this year, said Minister for Economy Aiyaz Sayed-Khaiyum.

Speaking in Parliament, he said the repayment relief was given for principal repayments, and in certain cases principal interest were deferred.

He said banks increased the loan provisioning to account for potential default and losses.

“For example, there are people who may have very small amounts of loan,” Mr Sayed-Khaiyum said.

“Some may have been working in a hotel and may have borrowed $2000 from the bank.

“They actually cannot make any payments whatsoever, principle or interest – so the banks have actually made the provisioning for them.

“For some of them, they have actually deferred it, some of course by making provisioning.

“They know that they will not ever be paid again, so they made a provisioning of over $100 million in that respect.”

Repayment relief

As of July this year, the total value of repayment relief for loans given by licenced financial institutions stood at $3 billion for 17,194 customers.

This includes the relief package offered by commercial banks, licenced credit institutions and the Fiji Development Bank.

As of June, 2020, the total value of repayment relief for loans was $3.6 billion, for an estimated 18,422 customers.

Mr Sayed-Khaiyum said the reduction by $0.6 billion in July showed that 1228 businesses no longer needed the relief, as cash per income had improved.

Although financial institutions are foregoing around $40.3 million a month in loan repayments, bank customers have picked up, as the number of people who required relief had reduced, he said

New lending

Financial institutions have recorded a total of $668 million in new lending from April to July this year, Mr Sayed-Khaiyum said.

“The current liquidity stands at $1.077 billion, and the foreign reserves stand at $2.3 billion, equivalent to about 8.7 months of retained imports,” he said.

“With this injection of liquidity and the foreign reserves going higher, what is really interesting, even until today, is we have seen that the yields on the government securities and the bonds have actually come down.

“This means because of liquidity, we pay less interest rate in that perspective.”

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