Largest private sector player in the industry, Commercial Bank’s support by way of moratorium for COVID-19-hit customers has topped the Rs. 300 billion mark, in addition to extending short and medium financial assistance to SMEs and exporters.
The bank has approved debt moratorium worth Rs. 153 billion under the Central Bank supported scheme and a further Rs. 161 billion directly. The number of applications received by COMBank includes 38, 272 from retail borrowers and 15,439 from SME and corporate borrowers.
“We are actively implementing the Central Bank Relief scheme and provided moratorium to many borrowers. Moratoriums were considered to all affected borrowers without strictly restricting them to eligible borrowers as per the CBSL scheme,” Commercial Bank Managing Director S. Renganathan told the Daily FT.
He said additionally those non-performing borrowers who came forward to reschedule their advances with a repayment arrangement to settle their facilities within three years were allowed up to 50% interest waivers on their accrued interest whilst withholding any recovery action already initiated.
“We are continuously evaluating our borrowers’ present position and considering whatever financial assistance within the Bank’s lending practices,” the Commercial Bank Managing Director said.
In line with CBSL guidelines the COMBank has reduced the interest rate on Equated Monthly Instalment (EMI) based loans which have obtained moratoriums under their scheme to 7% pa during the moratorium period.
Additionally the bank has also dropped all penalty interest and fees on credit cards to advances which are seeking re-scheduling under the CBSL Moratorium scheme.
The bank also introduced a unique payment relief scheme to assist people further with payments, especially after their moratorium period ends. (See box story)
Separately the COMBank has been active in offering relief via the Central Bank backed Saubagya Refinance Loan Scheme of Rs. 25 million each at 4% interest rate.
It had received nearly 6,000 applications, of which over 4,000 had been approved by the Central Bank. So far over Rs. 1.5 billion has been disbursed for around 450 approved applicants.
“We expect the majority of the applications to be registered very soon and disburse funds,” Renganathan said, adding that lack of documentation by applicants was among reasons for the delay.
The most significant initiative by COMBank post-COVID was securing $ 50 million long-term funding from the International Finance Corporation (IFC) – the private sector investment arm of the World Bank.
“Against such borrowed funds we have launched a scheme for Rs. 10 billion for the revival of businesses by affected export sector SMEs, preferably women-led and owned,” Renganathan added.
Loans will be provided at a very competitive rate of 8% per annum whilst the bank’s cost of funds is around 7% plus.
He said preference would also be given to COMBank’s unique and popular SME BIZ Club members.
“This is an innovative concept launched by COMBank to support SME in addition to various other measures taken in the past. The bank invites successful SME entrepreneurs to become a member and we provide continuous support to them to develop their business continuously. We brought the relationship management concept to SME customers through BIZ Club. We have more nearly 4,000 BIZ Club members,” Renganathan said.
COMBank has also launched another bank funded loan scheme allocating Rs. 50 million to support the microfinance sector borrowers who were affected by COVID-19. Branded as ‘Dirishakthi,’ loans under this scheme are extended at a very low rate of 9% per annum.
“Under this scheme, we provide financial support to micro finance enterprises coming under the purview of our Agriculture Micro Finance Units (AMFU) numbering 17 countrywide. We hope to support at least 500 microfinance borrowers under this scheme since the loan size is approximately Rs. 100,000,” Renganathan said.
The bank has also revised interest rates on various lending schemes downwards up to 2% pa recently and rates on overdue facilities were not increased as done in the past.
Cheque return fees to various other commissions have been not recovered at present with a view to support affected customers. “We are forgoing over 40% of our fee income as a support to our customers in this challenging period,” explained Renganathan.
(FT)