In this overview, we are taking a look at the current status of moratorium duration periods in the countries of lending companies on Mintos. We will address status only for the countries that had a type A moratorium or an imposed moratorium, as measures coming with this type of moratorium have limited duration periods. For some mentioned countries, these periods could be extended or finished, affecting the stream of borrowers’ repayments to lenders, or the ability to collect repayments for lending companies.
The moratorium glossary
Moratorium means a borrower is legally authorized to suspend, postpone, or reduce payments (principal, interest, or both) for a limited period of time. This action affects the whole repayment schedule and may lead to increased payments once the moratorium period or loan extension ends. National moratoriums can be ordered by the government, but in general terms, moratoriums can also be imposed by the national central bank and other regulatory authorities.
The moratorium as a payment deferral measure can be reflected as a provided grace period for the loan payments, as credit holidays, or as a loan payment extension available for a financial institution’s borrower.
Type A moratorium or “imposed moratorium” comes as a legal obligation introduced on the national level. It is mandatory for all credit institutions unless otherwise stated.
In its moderate and more common form, an imposed moratorium can be applied to the majority or to segments of financial players and to different loan products. It can be applied by credit institutions when their borrowers ask to delay payments. Based on the national central bank’s decisions or recommendations, the moratorium can be in force for all loan products, or only for certain products or terms (e.g. only for mortgage loans, only for fees or penalties, etc), or it can be related only to banks.
In the general overview of the moratorium status, 15 out of the 33 countries in which lending companies on Mintos do business had some form of the type A moratorium introduced:
| Country | Moratorium Type | Moratorium's description | Start Date | Duration/until |
|---|---|---|---|---|
| Albania | A | Imposed moratorium for all financial institutions | 17 March 2020 | 31 May 2020/31 August 2020 |
| Bosnia and Herzegovina | A | Three months loan repayment moratorium for banks | 20 March 2020 | 31 July 2020 |
| Bulgaria | A | Imposed moratorium for all financial institutions | 10 April 2020 | 30 June 2020 |
| Czechia | A | Imposed moratorium for all financial institutions | 2 April 2020 | 31 October 2020 |
| Kazakhstan | A | Imposed moratorium for all financial institutions | 16 March 2020 | 15 June 2020 |
| Kosovo | A | Imposed moratorium for all financial institutions | 16 March 2020 | 30 April 2020 |
| Lithuania | A | Imposed moratorium for banks, for mortgage loans | 20 April 2020 | 1 July 2020 |
| Moldova | A | The Central Bank's recommendation for credit holidays | 22 March 2020 | 31 May 2020 |
| Namibia | A | Imposed moratorium for all financial institutions | 26 March 2020 | From 6 to 24 months |
| North Macedonia | A | Imposed moratorium for all financial institutions | 20 March 2020 | 14 June 2020 |
| Philippines | A | Imposed moratorium for all financial institutions | 17 March 2020 | 31 May 2020 |
| Romania | A | Imposed moratorium for all financial institutions | 26 March 2020 | 31 December 2020 |
| Russia | A | Imposed moratorium for all financial institutions | 3 April 2020 | 30 September 2020 |
| Spain | A | Imposed moratorium for all financial institutions | 1 April 2020 | 12 July 2020 |
| United Kingdom | A | Moratorium for car and payday loans, mandatory for financial institutions on customer’s request | 27 April 2020 | 31 October 2020 |
In coordination with the Central Bank, the country’s government had introduced a moratorium until 31 May 2020 for all types of loans, for all borrowers and all financial institutions. The decree required borrowers to apply for a moratorium (payment extension) either in the form of extension without payment, with full delayed payment due after three months, or payment of interest only, with the principal restarting after three months grace period. As the moratorium ended on 31 May/1 June, the Central Bank introduced another moratorium with duration until 31 August 2020. This second moratorium is valid only for bank customers, selectively applicable only for clients from the highly impacted industries, like tourism.
Regulatory bodies in Bosnia and Herzegovina have introduced measures to facilitate loan repayments for both private individuals and legal entities. The measures are valid for bank clients in the country’s entity Serb Republic, and for the clients of banks and non-depository financial institutions (microcredit organizations and leasing companies) in the entity of Federation of Bosnia and Herzegovina. The moratorium was introduced in March 2020, and the grace period is available for private and legal borrowers for a period between three and six months, ending on 31 July 2020.
As of 10 April, a moratorium was approved for the borrowers of commercial banks in Bulgaria. In addition to the National Bank of Bulgaria’s decision, the government has passed a law that also includes the non-banking lenders into the moratorium obligations, enabling customers of alternative lending companies to also apply for repayment breaks. Borrowers who met eligibility criteria could submit requests for reliefs for their consumer, business and mortgage loans by 22 June 2020. According to the National Bank of Bulgaria, the credit obligations (principal or principal and interest) may be deferred for up to 6 months – until the end of 2020. Delayed interest and penalties will not be charged for the time while the payments are delayed.
The moratorium on the repayment of loans and mortgages in the Czech Republic was introduced on 2 April 2020, and it was binding for all banks and non-bank lenders. By this decision, both private and business borrowers were enabled to suspend their repayments for three or six months, based on their choice, with a maximum duration until 31 October 2020. Borrowers who had loans dating from before 26 March 2020 had to provide a statement (without proof) about the negative economic impact of the pandemic on the household income or on the business liquidity in order to become eligible for a moratorium.
On 16 March 2020, Kazakhstan’s government recommended lending companies and banks a temporary suspension of the borrowers’ payments of principal and interest on loans, without charges for late repayment penalties. The moratorium was imposed until 15 June 2020. The national regulator was closely monitoring the moratorium-related operations and compliance among pawnshops, online lenders, and microfinance lenders.
After 15 June 2020, SME borrowers that are highly affected by the pandemic-related issues can still apply for the grace period. Credit institutions are enabled to make individual decisions about grace period approvals.
During the period from 16 March to 30 April 2020, payments of loan installments for business and individual borrowers in Kosovo were suspended. The decision made by the Central Bank of Kosovo (CBK) and the Kosovo Banking Association imposed moratoriums that could be requested for a period of three months, without extra charges or additional fees. Interest for the extension period is due on the fourth month from the deferral approval.
The Bank of Lithuania encouraged lenders to be flexible and negotiate individual loan terms with borrowers in light of the pandemic. On a country level, the decision was made not to charge interest on delayed payments and to pause penalty surcharges for mortgage loans. Financial and credit institutions united in the Association of Lithuanian Banks signed an agreement that introduced a moratorium for business loans, for the clients of banks. The deferral period can last from three to six months, starting between 20 April and 1 July 2020.
The National Bank of Moldova has advised banks and alternative lending companies to offer a possibility of loan restructuring, a strong institutional recommendation introduced on 22 March 2020. Each borrower’s request was to be considered separately, for all businesses and individuals, including the end dates for the individual loan relaxation measures. For most of their customers, banks offered credit holidays until 31 May 2020.
The moratorium for borrowers in Namibia became effective on 26 March 2020. Due to the COVID-19 pandemic’s impact on the country’s economy, the Bank of Namibia introduced measures to assist distressed borrowers: individuals, corporations, and SMEs, in agreement with the Bankers’ Association of Namibia. Depending on the borrower or the credit institution itself, the moratorium or holiday on loan repayments can be granted to individual and business clients, as well as to financial institutions when it comes to their obligations toward the country’s financial regulatory authority. The credit holidays are valid for both principal and interest payments and can be in power for a period from 6 to 24 months. During the grace period, if a reduced interest rate would be applied, interest might be capitalized.
From 20 March 2020, the National Bank of North Macedonia adopted regulation amendments that allowed banks to offer their clients a grace period, an extension of a loan’s maturity date, lower interest rates, and more favorable loans to close the existing ones with. This decision, made together with the Ministry of Finance and Association of Banks of North Macedonia, makes these relieved terms for loans available for all borrowers and all products. The maximum term for loan holidays is until September 2020 – which is 3 months from the end of the emergency period in the country (14 June 2020).
In March 2020, the country’s government introduced a decision about the minimum mandatory 30-day grace period for clients of all financial institutions, without accruing interest and penalties or fees for late payments. In May 2020, the Tax Bureau announced that there will be no new extensions for taxpayers after 14 June 2020, regardless of changes to the lockdown measures. The banks from the General Community Quarantine have been giving extensions voluntarily in the most affected areas. Currently, the parliament is reviewing the bill that proposes a moratorium extension of one year or more, for all loans given during the period between 16 March and until the end of 2020. This bill is still in the review process.
Romania introduced a moratorium for loans starting from 26 March 2020. Individuals and businesses who got their loans approved prior to 31 March 2020 could request the loan repayment deferral using their income statement as evidence of disrupted income flow. Application for the payment extension without extra charges for individuals and businesses can last up to 9 months starting from March 2020, hence no longer than 31 December 2020.
The Russian government has officially approved a moratorium for borrowers on 3 April 2020. To get repayment deferral, borrowers need to prove that their income has been strongly affected by the COVID-19 related issues. By the recommendation of the Central Bank of Russia, borrowers of all bank and non-bank lenders should be protected from penalties and fines for late payments. During the moratorium, the interest is partially calculated. The current end date for a moratorium application is 30 September 2020, the last day when borrowers can apply for a credit holiday lasting for a maximum period of 6 months.
A three-month moratorium on mortgage payments for the most vulnerable groups of citizens and an automatic moratorium on rent payments for vulnerable tenants whose landlord is a large public or private housing holder was introduced in Spain from 1 April 2020. The moratorium was also introduced for non-mortgage loans and credits for the vulnerable groups. In order to get approval for payment deferrals, borrowers had to provide proof of negative impacts of the pandemic on the income flow. In Spain, one of the countries most affected by the COVID-19 pandemic in Europe, the state of emergency ended on 21 June 2020. The application for loan deferrals will end on 21 July 2020, one month after the end of the emergency state.
Starting from 27 April and until the end of October 2020, banks are refraining from credit card cancellations, and borrowers are given more time to repay their debts. Clients of banks and alternative lending companies can apply for a one-time, one-month payment freeze for the credit card, store card, catalog credit, or personal loan. Banks’ residential mortgage customers are allowed payment holidays for up to 90 days, and the government has announced a VAT payment deferral for a period of three months. Banks’ clients will be able to use a 3-month mortgage payment holiday until 31 October 2020, with a possibility to extend the deferral one time before the ending deadline.
