Connect with us

Economy

CBO Issues Statement On Economic Stimulus Plan’s Incentives

Muscat: The Central Bank of Oman (CBO) issued a statement outlining incentives stated in the Economic Stimulus Plan (ESP) that was endorsed by His Majesty Sultan Haitham Bin Tarik when he chaired a meeting of the Council of Ministers last week.

The bank valued the Royal directives on banking incentives that were in full harmony with the government’s concerted efforts pertaining to the ESP.

It also pledged its support to all national plans aimed to promote economic recovery amid the current circumstances before explaining in a statement issued that, due to the current economic challenges resulting from the Coronavirus (COVID-19) pandemic, the apex bank has instructed banks, finance firms and financial leasing companies to continue to grant a 12-month grace period for all existing and future laid-out borrowers, with effect from the date of termination of their services.

The CBO also instructed banks, finance firms and financial leasing companies to postpone repayment of loans of low-income employees for an additional period of six months till the end of September 2021.

Deferment of loan repayment for the two above-mentioned segments has to be effected without imposing any type of interest fees during the grace period, the CBO statement stressed.

The CBO then instructed banks, finance firms and financial leasing companies to continue to postpone premiums and interest fees payable by the borrowers affected by circumstances posed by COVID-19 for a further six-month period till the end of September 2021, without having to impose interest fees against deferred interest or impacting the credit rating of those loans in any negative way.

The CBO decided to go ahead with facilitation procedures capable of providing comfortable levels of cash liquidity in the banking sector.

This, the CBO statement said, will be in pursuance of stimulus packages related to credit grants that include raising the ceiling of borrowing, facilitating lending to stricken sectors, cutting down percentages of protective capital and other procedures aimed to assist banks, finance firms and financial leasing companies to perform their role in supporting economic recovery in the country and improving the levels of liquidity in the local market.

The overall aim is to enhance the banks’ ability to continue to offer credit to various stricken sectors, according to the CBO statement.

The apex bank also decided to increase the maturity period and cut down interest percentage on open market operation instruments, including interest against re-purchase transactions, foreign currency exchange and other procedures, the statement said.

It then affirmed that it will work in cooperation with the banks, finance firms and financial leasing companies to re-schedule loans to tally with new cash flows for borrowers to ensure their ability to meet their contractual obligations with financing institutions in line with emerging economic developments, without imposing fees against re-scheduling, the statement added.

The CBO said that this measure responds to the recent developments in trends of borrowers’ financial flows that resulted from the current economic circumstances and their impacts on re-payment schedules agreed earlier.

The developments necessitated a need for adaptation measures whereby banks, finance firms and financial leasing companies have to be directed to re-schedule loans to fit with cash flows to avoid the occurrence of any additional burdens on the borrowers and to ensure that no fees result from re-scheduling.

Published

on

Continue Reading
Advertisement

Trending