Home » Business » The central bank resolves the debate on how to calculate interest on loan deferrals

The central bank resolves the debate on how to calculate interest on loan deferrals

02:33 PM

Thursday 16 April 2020

I wrote – Manal Al-Masry:

Today, Thursday, the Central Bank issued a periodic book, in which it resolved the state of controversy and inquiries among clients in the recent period on how to calculate interest on 6-month deferred loan installments and ways of repayment, as part of precautionary measures to face the repercussions of the emerging crisis of the Corona virus.

On March 22, the Central Bank decided to postpone all customer entitlements automatically for a period of 6 months (unless the customer requested otherwise) with no delay returns or additional fines applied to late payment.

But the decision includes calculating the interest on the loan during the deferred payment period to be calculated and added to the remaining installments during the new repayment period as the loan life will be extended 6 months above the agreed upon due to the deferred payment.

The Central Bank said in its speech to banks today: “When applying the foregoing, the value of the returns calculated during the delay period (of 6 months) must be capitalized on the remaining amount of the facility, to be paid with the benefits during the new period of the facility, and in proportion to the ability of the customers to pay. “.

This means that interest on the loan is calculated for the 6-month period for which the loan is deferred and that this amount is added to the remainder of the total installments provided that it is paid during the new remaining period to pay the loan in proportion to the ability of each customer to pay.

The Central stressed the necessity of not requiring clients to postpone the value of the deferred return with the first due after the postponement period, (i.e. the first installment that will be paid from the loan after the end of the 6-month period), asking the banks to take the necessary towards fully adhering to the above and informing the clients of the cost and the way to pay it.

The bank said that these instructions come after the inquiries received regarding the mechanism of paying the value of the calculated interest during the delay period, and the discrepancies in the application between the banks.

Jamal Najem, the deputy governor of the Central Bank, told Masrawy in previous statements that the decision to postpone the repayment of the loans for 6 months will be “automatic” on all the different entitlements, unless the client requests not to postpone and regularize the repayment.

The banks sent letters and letters to customers by automatically delaying the loan installments for 6 months according to the Central’s instructions, and whoever wishes not to postpone and regularize the payment, the bank is notified by phone via the customer service or hotline, or through the bank’s website, or by answering a text message to the bank, or By visiting the nearest branch and submitting a request not to postpone.

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