SBP has given one-year reprieve on loan repayments, court told

ISLAMABAD: The Islamabad High Court (IHC) on Friday adjourned hearing on a citizen’s petition seeking to stop a local bank from harassing him to pay loan installments in wake of coronavirus outbreak till April 24.

The deputy attorney general informed the court that the government has extended the period of loan payment by one year to provide relief to the masses.

He said that the State Bank of Pakistan (SBP) had announced the policy for loan payments and it was available on the website. He added that the government policies to provide relief to the public must be appreciated.

Chief Justice Athar Minallah remarked that the businesses were closed these days due to the pandemic in the country, so how could the citizens pay their loans in installments in such circumstances.

The chief justice remarked that everyone should be informed regarding the relaxation announced by the government. The court adjourned the case till next date.

Earlier, the court had stopped a local bank from harassing the citizen to pay loan installment after he requested the court to stop financial institutions from seeking monthly loan installments in view of the financial crisis that emerged in the wake of lockdowns.

The applicant, Rafiqur Rehman, had said the banks were pestering their clients whose incomes have shrunk by the cessation of business activities. He had requested the court either to waive the loan installment or suspend them till the pandemic is over.

He said it is not possible for him to pay the installments in the prevailing circumstances. He said he had sent several letters to various authorities but no response was received as yet. “Despite the exceptional circumstances and lockdown, I am being harassed to pay the installments,” he had said.

Earlier this month, the SBP had announced that it extended the scope of financial relief package to borrowers availing loans under Refinance Schemes. “Now, the borrowers of SBP’s refinance schemes will be allowed for deferment in repayment of principal amount for one year,” it had said.

According to SBP, now the relaxation allowed for deferment in repayment of principal amount for one year for corporate, consumer, agriculture, SMEs and microfinance sectors, will now be available on financing of banks/ DFIs under SBP’s refinance schemes as well. With this deferment of principal, the complete repayment schedule/tenor of the loan will be extended by one year.

The borrowers will, however, continue servicing their mark up during the period of principal deferment. In case borrowers are not able to service mark-up payment, banks/DFIs may reschedule/restructure the loan in such a manner that tenor of the loan can go up to one year beyond the existing maximum tenor of the respective scheme.

As per announcement, borrowers of Long Term Financing Facility (LTFF), Financing Facility for Storage of Agricultural Produce (FFSAP), Refinance Facility for Modernization of SMEs, Refinance and Credit Guarantee Scheme for Women Entrepreneurs, Refinance Scheme for Working Capital Financing of Small Enterprises and Low-End Medium Enterprises and Small Enterprise (SE) Financing and Credit Guarantee Scheme for Special Persons can be availed this facility.