Mechanisms for the moratorium on loan repayments and debt restructuring measures | 27 March 2020
The Central Bank of Seychelles (CBS) and the Seychelles Bankers Association (SBA) have outlined the detailed mechanisms for the implementation of the banks’ relief measures, which include moratorium on loan repayments and restructuring of credit facilities.
These details follow the announcement of relief measures made by CBS and SBA last week, after taking cognizance of the need to support the Seychelles economy in light of the impact of COVID-19.
This relates to eligibility, types of restructuring arrangements, terms and conditions as well as application procedures.
Micro, small & medium enterprises (MSMEs) and self-employed individuals in the tourism and hospitality sector qualify for requests for moratorium and restructuring. Their applications for moratorium and/or restructuring assistance will be treated in priority by commercial banks, Development Bank of Seychelles (DBS) and Seychelles Credit Union (SCU).
MSMEs are businesses with an annual sales turnover of less than R25 million.
The financial institutions will also consider applications from the second category of borrowers as follows:
a) large businesses in the tourism and hospitality sector;
b) self-employed individuals and businesses in other sectors of the economy adversely impacted by the crisis.
All moratorium, restructuring and financing proposals will take into account the economic measures already put in place by the authorities such as guaranteed salary payments, tax holidays and the reductions in utility tariffs.
All borrowers who were already in default before February 2020 will not be eligible for the moratorium and restructuring measures.
Types of restructuring arrangements
The following types of restructuring arrangements will be available for the different categories of financial stress as assessed by the financial institutions in terms of their risk appetite and credit risk policies:
a) Severe financial stress:
Applicants will be eligible for a moratorium or temporary delay of six months on repayment of principal and interest of disbursed loans. In case of mutual agreement, loan facilities can be restructured namely through an extension of their tenors to allow the subsequent settlement of the unpaid principal and interest.
Where required, financing needs not already covered by public measures will be provided to eligible borrowers after an independent credit assessment, which is subject to validation by the CBS.
b) Moderate financial stress:
Applicants will be eligible for a moratorium or temporary delay of six months on repayment of principal of disbursed loans and access to working capital finance, subject to stricter requirements than applicants who are under severe financial stress. These requirements will be in line with the credit policy of their respective financial institution.
Terms and conditions
While the main covenants of existing loan agreements will remain in force, addendums will be signed to cover mutual obligations of customers and their financial institution as part of moratorium and restructuring arrangements. In the case of working capital finance, some of the specific requirements of the CBS will also form part of applicants’ contractual obligations.
More generally, in the event that credit lines are made available to the financial institutions by external agencies, including the CBS, the granting of facilities from these external funding sources will be subject to the conditions stipulated by the providers of these credit lines. The availability of these lines could result in preferential terms as they relate to working capital finance for deserving customers.
The SBA encourages customers to be proactive in contacting their relationship managers to provide an overview of their financial situation. Financial institutions will be guiding customers on expected contents of their applications; namely simplified forecast cash flow statements to assess the financing needs.
The SBA members will be doing their best to assess the needs of their customers and come up with quick and effective solutions to meet their financial obligations. If some pressing financial commitments cannot await the setting up of the moratorium, restructuring or working capital finance arrangements, financial institutions will duly consider exceptional support for the concerned customers. The members of the SBA are calling on all economic players to show
understanding towards employees, who will be under considerable pressure to fast-track applications and therefore be less available for more routine requests.
In these difficult times, CBS and the SBA members would like to reiterate their commitment to the well-being of all economic players in Seychelles.
Joint communiqué from the CBS and SBA