National Bank of Serbia introduces new moratorium on loan and lease repayments
Due to the public health situation caused by the Covid-19 pandemic, on 28 July 2020 the National Bank of Serbia (NBS) adopted a set of regulations bringing in a second moratorium on bank loan and financial lease repayments. The rules are set out in the Decision on interim measures applicable to banks and the Decision on interim measures applicable to financial leasing companies to mitigate the impact of the Covid-19 pandemic and assist in maintaining the stability of the financial system.
These decisions allow borrowers and lessees to suspend payments becoming due from 1 August 2020 to and including 30 September 2020, as well as any outstanding payments that became due in July 2020.
The moratorium applies to private individuals, registered farmers, sole traders, and businesses, with banks and leasing firms required to offer clients the option to benefit from this moratorium at the latest by 31 July 2020. These offers must include the start date and duration of the moratorium and any other relevant information, and must be published on the web site of the bank or leasing company. The moratorium will affect all clients that have not formally opted out within ten days after the offer notice was published.
Clients may opt out of the moratorium by e-mail, regular mail, or telephone, or in person at their bank or financial leasing firm. Clients may also opt out once the moratorium has become effective, either by contacting their bank or leasing company as described above or by making any outstanding payments in full.
Outstanding payments that become due during the course of the moratorium will not accrue any default interest for the duration of the moratorium. No enforced collection will be initiated, nor will any other legal action be taken to collect these claims matured during moratorium period.
Once the moratorium has ended, banks and leasing companies will distribute the regular interest accrued during this time uniformly over the entire repayment period, which will also be extended by the time the moratorium was in operation. Accordingly, banks and leasing firms will produce new repayment plans extended by the duration of the moratorium.
It is worth noting that, according to the new rules, the moratorium also applies to standing orders and direct debit arrangements. As such, starting on 28 July 2020, employers and the National Pension and Disability Insurance Fund should suspend direct payment of any affected loan or lease instalments until notified by the relevant bank or leasing firm that the client in question has opted out of the moratorium. There is no cause for concern even if funds are debited despite a client wishing to benefit from the moratorium: in these cases, the bank or leasing firm is required to permit the client to access the funds, disburse them, or transfer them into an account with another bank without delay.
The moratorium does not apply to loans accelerated due to default. In these cases borrowers will not be able to benefit from the central bank’s new decisions.
Finally, anyone wishing to opt out of the moratorium may do so by simply continuing to regularly make payments to their bank or leasing firm as they become due.