Holiday Repayments In 2022 Receive Over 100 000 Applications

By: Justicia Shipena
In 2022, the banking industry received over 100,000 applications for repayment holidays, the Bank of Namibia (BoN) revealed last week.
“During 2022 the banking industry received a total of 122,819 applications for repayment holidays,” said Kazembire Zemburuka, the BoN’s Director of Strategic Communications and International Relations .
Zemburuka said the value of loan approvals indicated that individuals dominated the approvals with a total of N$2.3 billion in 2022 compared to N$4.9 billion in 2021.
He said this was followed by the real estate and business services sector with N$1.2 billion.
Trade and accommodation had approvals of N$731.1 million, and the mining sector with N$285.1 million.
On the Covid-19 relief, Zemburuka said the bank decided to continue with some of the measures instituted to cushion households and businesses from the worst impacts of Covid-19 pandemic and its related restrictions on economic activities.
He said the central bankhas decided to continue with some of the measures instituted to cushion households and businesses from the worst impacts of Covid-19 pandemic and its related restrictions on economic activities.
“The new measures provided came into effect on 2 April 2023, and are valid until 1 April 2024,” he said.
These measures are said to include loan repayment moratoriums, liquidity relief measures, and the relaxation of the capital conservation buffer and concentration risk/single borrower limit.
He said these relaxations allowed commercial banks to extend credit to economic sectors most affected by the pandemic and its aftermath.
Since its issuance in 2020, the Determination on Policy Changes in Response to Economic and Financial Stability Challenges following the fallout of the pandemic was extended in 2021 and in 2022 until 31 March 2023.
According to him, the policy interventions have gradually alleviated the impact of the pandemic on the banking industry.
Zemburuka added that despite the resumption of normal business activities, some of the key sectors of the economy that were hit hard by the global pandemic still require more time to recover.
“This necessitated the need to revise the Determination (BID-33) to extend the period of the credit relief measures extended to banking institutions and their clients to enable the enhanced credit relief measures introduced late last year November 2022 to take effect,” he said.
Zemburuka noted that the limits imposed in respect to total exposures outstanding at any time to a single person or a group of related persons has been postponed until 1 April 2024.
He said the limit is currently set at 25% since December 2019.
With this postponement, Zemburuka said the limit will still stand at 30% of a banking institution’s capital funds.
He added that the postponement will provide banking institutions with further scope to lend to the most vulnerable sectors of the economy during these challenging times.
In addition, borrowers who are granted payment reliefs and who are repaying their loans as agreed, should not be reported to the credit bureaus for purposes of credit reporting.
“This measure is to ensure that a payment holiday does not adversely affect borrowers’ credit records for the duration of the payment moratorium,” he said.
Moreover, he said since the banking institutions’ liquidity position remains healthy, and any concerns regarding liquidity risk are muted, the liquidity relief measures that applied previously are no longer necessary.
Hence, banking institutions are from now on required to comply with the liquidity requirements set in the determination on minimum liquid assets.
At the same time, the capital conservation buffer which enabled banking institutions to use the capital they have built up during better financial and economic conditions for lending purposes is no longer required anymore.
This, Zemburuka said, is because banks hold capital above the minimum capital requirements plus conservation buffer.