Romania’s National Bank (BNR) issued a press release aimed at providing guidance to commercial banks for rescheduling the installments of their debtors without a negative impact on the quality of their portfolios of loans, and also for extending loans above the constraints set under normal circumstances.
The central bank, however, recommends commercial banks to “continue to adequately assess the quality of all credit exposures to identify improbability of payment.”
The deferred payment following a general measure or through direct negotiations with the clients, “determined by the current situation,” should not be associated with a notion of financial difficulty of the debtor, the press release reads. Consequently, the loan should not be reclassified, an operation that would require provisioning.
The central bank thus delegates to commercial banks the responsibility of discriminating between debtors who face financial problems generated by “the current situation” (which should not be associated with a notion of financial difficulty, in the sense of the loan classification regulations) and those who face genuine financial difficulties. BNR promises more clarifications in private, technical details to be submitted to banks.
“Credit institutions will be told how the flexibility of the prudential framework can be used to reflect deferred payment measures in a way that also aims to maintain the financial health of the banking sector so that it can continue to provide support to the real economy,” the BNR press release reads.
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