NPLs to be frozen for 3 years

With the recent Non Performing Loans (NPL) framework resolution released by the Royal Monetary Authority (RMA), it means that the private sector or those sectors that had been listed under the NPL were provided an extension of 3-year period for their NPLs.

Many private firms stated that it was much of a relief in addition to repeated issuance and support from the government’s side considering loan repayment deferments, provisions on working capital loans at concessional rates and even collateral free loans through initiative such as the National Credit Guarantee Scheme (NCGS) to aspiring entrepreneurs to enable perpetuity in terms of credit rollouts in the economy.

Gathering from views of these firms, a haze still remains.

Despite the help many of these private sector firms still wonder if taking additional loans in this state of the economy is a viable bet until the vaccines have been rolled-out and normalization comes in.

The press release and the High Level Committee meeting indicated that the intentions were to revive and rehabilitate the viable business sectors, and also in turn keep the financial institutes in providing continuity in their credit flow services for the economy.

As anticipated, the NPL’s difference grew even wider with a COVID-19 struck nation putting in all the efforts to mitigate these differences in the widened gap in NPLs as compared to pre-COVID times.

Some of these private firms said that the government played its part to their content, yet, these times are extraordinary where one would not be able to take little to no risk when availing more loans than they already have.

As indicated from the RMA press release, the NPL ratio to total credit further declined from the previous fiscal year.

Most of these NPLs were from sectors dealing with service, housing, commerce, manufacturers and minority were reported from small businesses.

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