The National Bank of Serbia (NBS) has published on its website a document with examples of what exactly implies a delay in repayment of credit obligations. NBS explains that clients who accept a default (moratorium) in repayment have no obligation to pay their credit obligations, either on interest or principal, within the next 90 days.
Payment arrears can be used by companies, entrepreneurs and citizens on the basis of their credit obligations – home loans, consumer and cash loans, credit cards and current account loans.
“For all companies and entrepreneurs more affected by the current situation, this is an opportunity to defer payment of their obligations for the duration of the difficult situation, so as to avoid the possibility of arrears and accruing interest on arrears”, the NBS said. For companies and entrepreneurs to some extent affected by the current situation, this is an opportunity, the NBS claims, to feel more comfortable financially because delaying the payment of obligations will give them additional liquidity for their business.
For the citizens affected by the current situation, they say, the deadlock provides an opportunity to at least mitigate their reduced income or increased costs by not having to pay their annuities based on credit obligations but also not having to, in a difficult situation, engage in activities related to payment of monthly installments.
“Although the moratorium applies to all clients, clients who do not feel affected by the current situation, have relatively stable incomes, can continue to pay their credit obligations without using a moratorium”, the Central Bank said.
They explain that a delay in repayment does not mean writing off or releasing a client’s quarterly credit obligations – loan commitments related to the grace period (three monthly annuities) must be settled at the end of the default period. They point out that the delay in repayment of credit obligations for 90 days does not produce any additional costs for the client – the effective interest rate, as a universal and comprehensive measure of the total cost of loans to the beneficiary, for each loan that enters the moratorium will remain the same, and in the annuity plan that will user get after the moratorium.
In order to facilitate repayment, the National Bank of Serbia recommended, as a basic model, that banks add three monthly annuities to the end of the repayment period by extending the repayment period by three months and allocating accrued interest on the repayment period of the loan, NBS said.
They explain that if a client were able to settle his / her quarterly credit obligations from the standstill period after the downtime, his / her annuity after the downtime would remain unchanged, but the monthly obligations due in the first month after the downtime (the fourth month from now) would be enormous increased (four times four monthly annuities).
“The model recommended by NBS does not create any additional costs for the client and the slight increase in annuities after the downtime is a result of the client’s ability to finance the obligations incurred during the downtime by allocating it to an extended repayment period”.
The NBS decision leaves customers with an opportunity to agree with the bank some other (alternative) way of repayment of their liabilities after the lapse of the standstill period, if they deem it more acceptable to them.
The basic model for the implementation of the NBS Decision – three annuities from the standstill period are added to the end of the repayment period by extending the repayment period by three months. The goal is to not overburden your monthly debt obligations after the deadline expires on the basis of the annuity period.
“An annuity after a grace period is minimally increased due to the allocation of accrued liabilities from the default period to the remaining repayment period”, the NBS document states.
NBS offers possible alternative models where the annuity remains the same, but the entire quarterly downtime obligations fall on the client immediately after the downtime. In the first variant, after the deadline expires (fourth month), the client pays all three annuities from the deadline period (principal and interest), and in the second, after the deadline expires (fourth month), the client pays only the interest related to the deadline period. NBS points out that banks are obliged to offer the customer a basic model, while other models are only possible at the express request of the client, Kurir reports.
