The NBS Executive Board held an extraordinary session today and adopted regulations which enable bank borrowers and financial lessees to further postpone their liabilities under loans, loan products and leasing.
An additional suspension in the settlement of liabilities has been prescribed by:
In accordance with the regulations adopted today, borrowers have been offered one more suspension in the settlement of their liabilities to banks/financial lessors, maturing in the period between 1 August 2020 and 30 September 2020, as well as a suspension in the payment of liabilities that matured in July 2020, and which the borrower has not settled.
“When the pandemic first hit, the NBS reacted efficiently and decisively, providing citizens and corporates with a suspension in the payment of their liabilities to banks and financial lessors for a period of three months. The importance and timeliness of this decision is substantiated by the fact that more than 90% of borrowers made use of this option”, said Governor Jorgovanka Tabaković. “Bearing in mind that the emergency health situation is still in place, the NBS has decided to give citizens and corporates another respite in the payment of their liabilities, thus fulfilling its statutory objective to preserve financial system stability”, said the Governor.
Bank products subject to the moratorium
The moratorium is applied to liabilities under bank loans and loan products (such as current account overdrafts and credit cards), as well as other bank products (including liabilities under interest rate risk hedging instruments associated with loans and/or loan products, bank guarantees).
The moratorium is not applied to liabilities arising from payment transaction services (e.g. transaction execution fee, account maintenance fee), investment services, broker-dealer operations, services associated with safes, etc.
Banks/lessors are obligated to offer the suspension in the settlement of liabilities (the moratorium) to natural persons, agricultural producers, entrepreneurs and companies before 31 July 2020.
The notification about the offer of the bank/lessor will be posted on their internet page, and will contain information about the beginning of the implementation of the moratorium and its duration, interest calculation, manner in which obligations will be settled after the moratorium has ended, possible alternative ways for settling the liabilities, as well as an illustrative example of the amount of liabilities before and after the moratorium.
If a borrower does not decline the offer within ten days of receiving it, the offer will be deemed as accepted.
Borrowers may decline the offer of the moratorium electronically, by regular mail, telephone or on the premises of the bank/lessor, within ten days of the publication of the notification of the offer, and they can also halt the moratorium during its implementation by requesting this from the bank as described above, or by settling the due and outstanding obligation in full.
For the duration of the moratorium, the bank/financial lessor does not calculate regular (agreed) interest on liabilities maturing during the moratorium. The bank will calculate the regular interest on the unmatured debt, and the amount of the regular interest corresponds to the amount of that interest in the repayment plan that was valid before this decision was enforced. If the debtor is a company, the bank/lessor may also calculate regular interest on the principal amounts which will fall due during the moratorium.
As for default interest, the bank/lessor will not calculate it on the unsettled receivable which matured during the moratorium. In addition, enforcement and enforced collection procedures will not be initiated against the borrower, neither will other legal actions be taken to collect these receivables.
Cessation of the moratorium
Upon the cessation of the moratorium, the bank/financial lessor will calculate regular interest and distribute it equally across the repayment period (without attributing it to the debt principal), and the repayment period will be extended for the period of the moratorium. Default interest calculated during the moratorium on receivables that were due before the moratorium was implemented will be distributed equally across the repayment period (without attributing it to the debt principal).
In accordance with the above manner of interest calculation, the bank/lessor shall make a new repayment plan extended for the period of the moratorium and send it to the borrower via email or mail, incurring no additional costs for the borrower. The repayment plan must be made in such a way as to ensure that the borrower is fully informed of all the elements of the liabilities and the manner of settling them.
When sending the repayment plan, the bank/lessor must also clearly present to the borrower other possible methods of repayment and the deadline within which the borrower may request a different manner of repayment after the moratorium is lifted.
Within seven days upon receiving the repayment plan, the borrower may request from the bank/lessor – instead of the manner of payment defined in the plan – to settle the liabilities in the following manner, after the moratorium is lifted:
Current account overdraft and credit cards
During the period of the moratorium, the bank shall calculate regular (agreed) interest on liabilities under credit cards and current account overdrafts, while the validity period of overdraft and/or credit card shall be extended for the period of the moratorium.
Standing orders and administrative garnishments
As of the effective date of the Decision on Temporary Measures for banks (28 July 2020), banks shall suspend borrowers’ repayment of liabilities covered by the moratorium under all standing orders (by deactivating standing orders), so that borrowers intending to accept the moratorium, whose July annuity is due starting from that day, could cover that annuity by the moratorium as well.
Borrowers intending to decline the moratorium have no cause for concern, because after the borrower duly informs the bank that he is declining the offer (by 10 August 2020), the bank is obligated to collect the liabilities falling due after the effective date of the Decision in the amount that would have been collected had it not been for the suspension under standing orders (without any additional interest calculation), and to activate the standing order. Also, if borrowers opt to decline the moratorium after 10 August, they will be able to do so without any consequences, i.e. they will be in the same position as the customers who timely informed the bank about declining the moratorium.
The same principle applies to borrowers repaying their liabilities to banks/lessors via administrative garnishment – employers, i.e. the Serbian Pension and Disability Insurance Fund should halt the transfer of funds to borrowers’ credit accounts as of 28 July 2020, until the bank/lessor informs them that the borrower has declined the moratorium. Namely, if the borrower who informed the bank/lessor that he declines the moratorium pays his liabilities via administrative garnishment, the bank/lessor shall promptly inform the employer, i.e. Pension and Disability Insurance Fund about that, in order to prevent the suspension of the funds transfer, i.e. to allow the execution of payment in the amount that would have been paid had the administrative garnishment not been suspended.
Upon receiving the information from the bank/lessor that the borrower declined the moratorium, the employer, and/or the Pension and Disability Insurance Fund should make the transfer based on liabilities which fell due after the effective date of the Decision, in the same amount that would have been applied had the administrative garnishment not been suspended and to again activate the administrative garnishment to apply to future liabilities of the borrower. In this case as well, borrowers intending to decline the moratorium have no cause for concern because no additional interest shall be calculated if their July annuity is settled via administrative garnishment applied at a later date (after their bank/lessor has informed their employer or the PDI Fund that they have declined the moratorium in accordance with the regulations).
It is important to note that the principle that has been put in place (suspension of all administrative garnishments starting from 28 July 2020, until it is established who will decline the moratorium) does not prevent employers from interviewing their employees and making the transfer of funds based on the administrative garnishment to accounts of those employees who informed them that they would decline the moratorium.
As for those borrowers who accept the moratorium, and the employer or the Pension and Disability Insurance Fund make the transfer of funds via administrative garnishment (within the regular repayment of liabilities during the moratorium) – banks/lessors are obligated to make available those funds to the borrower within the shortest possible term, as well as the payment of those funds or a transfer of funds to the borrower’s account in another bank.