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Payment restructuring due to coronavirus spread: Bank of Russia’s measures

25 March 2020

The Bank of Russia recommends that creditors consider applications promptly and offer mortgage repayment holidays to borrowers having medical certificates of the coronavirus disease. Officially confirmed Covid-19 cases may be grounds for prompt consideration of applications for restructuring consumer loans and cancelling a forfeit (fine, penalty) charged for failure to properly fulfil contractual obligations. The relevant recommendations are given in the information letter the regulator has sent to banks, microfinance organisations (MFO), credit consumer cooperatives (CCC), agricultural credit consumer cooperatives (ACCC), and insurers.

As recommended by the Bank of Russia, mortgage loans should be restructured for borrowers with the confirmed disease even if a citizen has already exercised the right to mortgage repayment holidays earlier.

In addition, creditors are advised to communicate with borrowers remotely (by telephone), while borrowers should provide all necessary documents, including the certificate of disease, after their recovery.

The Bank of Russia also recommends that creditors approve restructuring applications even if citizens apply already after their recovery. According to the information letter, no penalty shall be charged on overdue obligations in this case. In addition, the information sent to credit history bureaus (CHB) shall not deteriorate such borrowers’ credit history.

The Bank of Russia recommends that creditors do not foreclose on mortgaged property, being the only housing of a borrower and his/her family members, before 30 September 2020, if the borrower with the confirmed coronavirus disease (or the borrower having a family member with the confirmed disease living together with the borrower) fails to perform his/her obligations under the mortgage loan agreement.

In turn, the regulator allows banks not to increase related loan loss provisions, and MFOs, CCCs and ACCCs — not to recognise these loans as restructured ones when forming related loan loss provisions, if borrowers have the confirmed coronavirus disease.

Insurers are recommended to approve applications from insured persons with the confirmed disease if they request an extension of payment under voluntary insurance agreements providing for regular payments to insurers. In addition, if a citizen with the confirmed coronavirus disease requests an insurer to extend the period for submitting required documents on an insured event (under voluntary insurance agreements), all insurers are recommended to make positive decisions on such requests and charge no penalty for a failure to comply with deadlines caused by an insured person’s infection with Covid-19.

These recommendations are given within the package of measures aimed at supporting Russian citizens that has been developed by the Bank of Russia.

Preview photo: Artem Tryhub / Shutterstock / Fotodom