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More opportunities for Belarusian banks to grant loans now available

27.03.2020

Commercial banks will have more opportunities for granting loans thanks to measures taken by the National Bank of the Republic of Belarus. Chairman of the Board of the Association of Belarusian Banks Nikolai Luzgin made the statement as he commented on the countercyclical measures taken by the central bank in order to encourage the banks to support the real sector of economy, BelTA has learned.

Nikolai Luzgin believes: “Banks will have more opportunities for additional lending or for prolonging previously granted loans. I should note that banks are interested in ensuring the normal life of their clients, including corporations and individuals. Regulatory restrictions have been relaxed, this is why the banks have more freedom for granting loans to their clients.”

The official noted that the central bank rather tightly regulates the operation of Belarusian banks, in particular, lending operations to the real sector of economy and to individuals. “It is primarily done to ensure the stability of the banking system and the financial system. But in the current complicated economic conditions the central bank decided to ease up on its regulatory function a bit. The measures that have been taken are aimed at facilitating operation primarily of the real sector of economy in current complicated conditions,” Nikolai Luzgin pointed out.

The National Bank of the Republic of Belarus has relaxed restrictions on lending to commercial entities. Requirements concerning the sufficiency of foreign currency earnings for repaying forex loans have been relaxed. Requirements to create reserves for loans and so on have been relaxed.

According to Nikolai Luzgin, the measures taken by the central bank can be considered sufficient for now. “But as the situation develops, certainly, additional measures can be taken,” believes the chairman of the Board of the Association of Belarusian Banks.

On 18 March the National Bank of the Republic of Belarus took a number of countercyclical measures to enhance the ability of commercial banks to keep providing financial support to the real sector of economy. The decision was prompted in view of the stronger effect of negative external factors. In particular, certain prudential requirements were tweaked till 31 December 2020. While classifying assets susceptible to credit risks and while forming special reserves, banks can ignore the criterion of sufficient receipts in foreign currency of the debtor.

Supervisory boards of commercial banks were sent recommendations on priority transfer of last year’s profits and undistributed profits of past years to the reserve fund and the authorized fund. The central bank also recommended that banks should not pay out dividends to shareholders in 2020.

On 26 March the National Bank mentioned additional measures designed to enhance the ability of commercial banks to support the real sector. The banks are allowed to keep the size of their conservation capital buffer at 2.25 percentage points till 31 December 2020. Some measures can be used in the course of classifying assets susceptible to credit risks and in the course of forming special reserves.

The National Bank of the Republic of Belarus also encouraged commercial banks to consider the possibility of loan repayment holidays for natural persons. The banks were also encouraged to postpone loan due dates.

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