Termination of the loan vacations: explanation of the regulator
With the start of a pandemic coronavirus infection, many borrowers found themselves in a difficult position because of declining revenues. To help citizens, a law was passed about credit vacation (№ 106-FZ), which allows those whose income decreased more than 30%, to obtain a deferment of payments on credits (loans). Documents proving income, borrowers had to present to the lender within 90 days. In the next few days that time will come for borrowers who have benefited from the vacation in the first days of the law.
The likely situation when the borrower fails within this time to confirm the decline in income by 30% (for example, having made a mistake in my calculations when applying for the vacation). The Bank of Russia believes that conscientious borrowers inability to document the right to use the vacation credit shall not result in painful consequences.
The Bank of Russia sent to banks and microfinance organizations an information letter, which recommends in such cases to consider the possibility to renew for bona fide borrowers vacation credit for its own program of restructuring of the creditor, starting from the same date, which conducted the countdown of vacation credit according to the law.
This approach will allow the borrower to avoid arrears and not to spoil credit history. In turn, the citizens Bank of Russia recommends to contact the creditor and together to find an acceptable solution.
The Bank of Russia gives advice in case the borrower has received credit vacation, but decided to use them. If this occurs before the next loan payment and if the borrower agreed with the Bank on the return to the old schedule, the consequences for the borrower should not be, even if it has not submitted the documents on income loss.
In cases when the borrower applied for credit vacation, but decided to use them to receive confirmation from the lender or before the first day of vacation, he can just withdraw his appeal and to submit documents proving the loss in income. While the borrower remains entitled to seek the vacation in the future.
The Bank of Russia separately reminds credit institutions that these recommendations do not affect reserve requirements. In terms of creation of reserves the credit organisations are recommended to follow the approaches set out in the information letter from 17.04.2020 number IN-01-41/72.