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LOAN repayments for all customers have been deferred for six more months from January 1, 2022, the Central Bank of Bahrain (CBB) has announced.
The current loan deferral option expires on December 31, and the extension means loan instalments need not be repaid till June 30, 2022.
Directing banks and financing companies to offer both individuals and companies the option to postpone their instalment payments, the regulator said yesterday that profit or interest rates should remain unchanged and that financial institutions must not impose any additional fees on the outstanding loans.
Banks can however extend the tenor (maturity period) of the loan while the instalment amount remains the same, the CBB added, in a statement.
The decision aims to alleviate some of the financial burden on those who have been affected by the pandemic and to support various economic activities in light of the continued exceptional circumstances resulting from the Covid-19 pandemic, said CBB Governor Rasheed Al Maraj.
“This comes after consultation with the banking sector, whose co-operation with individuals and corporates has contributed in strengthening various sectors through the availability of liquidity as loan repayments were deferred. It has helped in maintaining economic growth and the stability of various financial and commercial transactions,” he added.
This is the fifth time that loan repayments have been deferred since March 2020, when the government announced a financial package of $11.39 billion (BD4.3bn) to combat the fallout from the outbreak.
Citing a Bahrain Centre for Strategic, International, and Energy Studies (Derasat) study, the GDN reported in May this year that loan deferrals have greatly helped many Bahraini families overcome the financial challenges posed by Covid-19.
The study on the socioeconomic impact of the pandemic in Bahrain analysed the impact of the first two decisions of the CBB to defer loan repayments for Bahrainis – in March 2020 and in September 2020 – based on interviews with more than 100 Bahraini households.
The research paper concluded that loan deferrals, especially the one in March 2020, helped Bahraini families overcome the financial challenges posed by Covid-19, including decreased income and increased expenditure: A reassurance factor among them.
The paper affirmed that had the deferrals not been approved, many Bahraini households would have had to use a combination of decreased expenditure and running down savings to manage their finances … or worse.
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