Due to the second closure: The Supervisor of Banks announced the extension of the previous outline of all types of loans • From March until now, the repayment of 738,000 loans in the amount of NIS 9.5 billion has been postponed
Bank of Israel.
A move that will help borrowers
Photography:
Oren Ben Hakon
Following the closure, the Bank of Israel's Supervisor of Banks announced an extension of the deferral arrangements for repaying loans of all types in the banking system - consumer loans, mortgages and business loans.
The Supervisor of Banks reveals that from March to mid-September, the banks have already deferred loans to about 738,000 customers in all operating segments, in a cumulative amount of about NIS 9.5 billion.
According to the Bank of Israel, the commercial banks themselves have also taken steps designed to make it easier for customers to repay their loans.
At the same time, the end of 2020 is the banks' deadline for implementing the "Strum reform", to increase competition in the financial intermediation market - a reform enshrined in law in 2017.
This reform requires banks to reduce credit facilities on bank credit cards by 50% in order to allow non-bank credit companies to compete with them.
Some banks have already begun sending messages to their customers about reducing the amount of the credit line, right now - in contrast to the measures currently being published by the Bank of Israel, which are intended to expand credit lines and allow citizens to get through this challenging period.
The outline for deferring loan repayment, formulated by the Supervisor of Banks as early as the beginning of May and has been adopted by the banking system.
On July 13, the Supervisor of Banks announced the extension and expansion of the outline.
Another extension
The Banking Supervisor's announcement now states that "the Israeli government's decision to impose another closure in order to deal with the corona plague leads to various consequences for customers of the banking system. To help customers deal with the consequences of the closure, which include, among other things, declining income, damage to employment and difficulty repaying loans "The Supervisor of Banks has announced a further extension of the outline, which has been adopted by the banking system and will take effect from October 1."
According to the published outline, borrowers will be able to submit applications to defer loan repayments until the end of the civil year - both for private and mortgage loans and for business loans.
In the case of consumer loans of up to NIS 100,000, customers who have deferred payments for a period of up to six months will be able to receive an additional deferral until the end of the year, and in fact reach a deferral of up to nine months.
Customers who have not yet deferred payments and are now interested in deferring them will be able to receive a deferral of up to six months.
It should be noted that the deferral of the principal repayments will be approved without the discretion of the Bank.
A bank may also allow a deferral of the interest repayment in addition to the deferral of the principal repayment.
Thus, for example, if for a loan repayment of NIS 100,000 the borrower repays NIS 2,000 per month, consisting of NIS 1,500 principal repayment and NIS 500 interest repayment, the bank will be obliged to accede to the borrower's request to defer the repayment of NIS 1,500 and may defer the repayment of All the 2,000 shekels.
In the case of mortgages and credit to businesses - the previous outline will continue at the request of borrowers.
Like new credit
The Bank of Israel clarifies that it is important to emphasize that deferring loan payments is the same as new credit, given in the original interest terms under the outline, and therefore customers must make intelligent use of this tool and not defer loan payments unnecessarily.
In other words - this deferral costs you money, it actually extends the life of the loan on the same terms you received it, so that in total you will pay higher interest than originally planned.
In addition, the Bank of Israel hopes that this move will enable and help borrowers who have difficulty repaying, reach an agreement with the banks during the deferral period, without the sword of such a threatening collection and interest rate being placed on the borrowers' necks.
