Central Bank issues clarification over six-month loan moratorium

Miguela Xuereb

The Central Bank has issued a clarification over the six-month moratorium on loan repayment with respect to interest accrued during the moratorium period.

In a statement on Thursday, the Central Bank said that there were a number of queries by the general public and credit institutions which it was seeking to address.

The Central Bank explained that during the course of the moratorium, the interest is to be accrued but not capitalized. This means that no interest compounding is to occur during this period. This accrued interest would subsequently be recovered on a straight line basis (spread equally) across the remaining modified maturity term of the loan after the end of the moratorium period, the Central Bank said.

Borrowers could enter into mutual agreements with their credit or financial institutions for different repayment plans – such as shorter terms and higher payments or vice versa – as long as no compounding on the deferred interest accrued during the moratorium occurs.

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