Banks asked to restructure Loan Repayments for Businesses in Education, Hospitality Sector

Bank of Uganda (BOU), has asked all Supervised financial institutions to continue providing credit relief for one more year to borrowers in the education and hospitality sectors who are still negatively affected by the pandemic.

The Request follows the expiry of the Credit Relief Measures on September 30, 2021, that BOU, put in place to help stressed borrowers cope with the effects of the COVID-19 pandemic. The CRM expired on September, 30 2021.

In a statement released by the Deputy Governor BOU, Michael Atingi-Ego, the extension seeks to ensure that credit is available to support otherwise viable businesses in the education and hospitality sectors that remain under a partial or total lockdown.

This credit relief extension means that effective October 1, 2021 , borrowers in the education and hospitality sectors that had borrowed before April 1, 2020, can apply to have their loans restructured one more time on or before September 30, 2022, at the discretion of their financial institution.

Atingi-Ego noted that the restructuring may involve but not be limited to, extending the loan tenor, reduction of amounts in their loan repayment instalments, reduction of the applicable interest rate, a moratorium on repayments and/or a combination of these.

He asked all the Participating Financial Institutions to stop the accumulation of interest for any of the loans that benefit from this extended credit relief.

“In addition, loans restructured under this extended credit relief shall be exempt from penalties for late repayment and fees for early redemption,” he noted.

Atingi-Ego requested and encouraged the affected borrowers to contact their financial institutions to find out if they qualify, get more information, and apply for this extended credit relief.

He said that as Bank of Uganda, they shall continue to review the credit relief programme, noting that it is ready to take other appropriate action to ensure the stability of the financial system, as the pandemic evolves.