Bank of Russia recommends that creditors extend retail and SME loan restructuring until 1 July 2021
Creditors should make a decision to restructure a retail loan when the borrower (or their family member) has a confirmed case of COVID-19 or their income has declined to an extent that the borrower is no longer capable to service the debt, as explained in the Bank of Russia’s information letter sent to all creditors.
According to the regulator, loan repayment holidays, mortgage repayment holidays, and banks’ in-house restructuring programmes have turned out to be rather efficient anti-crisis instruments as they have helped reduce borrowers’ default risks and enabled a large number of people facing hardships to recover solvency and resume their loan repayments.
Specifically, 72% of borrowers have been able to resume their scheduled payments after the expiry of the loan repayment holidays under Federal Law No.
Nonetheless, although the number of loan restructuring applications from individuals has been continuously decreasing, it is still significant. Changes in loan agreements are required primarily by the lowest-income households.
As regards small and medium-sized enterprises (SMEs), 66 banks surveyed by the regulator report a rise in the number of loan restructuring applications, since a large number of businesses have not yet fully restored their operations, among other things.
The Bank of Russia believes that loan restructuring as a support measure for households and businesses is still relevant and should be extended.
The regulator emphasises that the usage by banks of their own restructuring programmes is merely advisable.
