Trinidad’s Central Bank Welcomes Initiatives By Commercial Banks

PORT OF SPAIN, Trinidad and Tobago, March 26, 2020 (CMC) – The Central Bank of Trinidad and Tobago (CBTT) says the proposed payment deferrals, being implemented by banks operating, here, will provide flexibility to customers of financial institutions.

The Bankers’ Association of Trinidad and Tobago (BATT) recently announced that its members will be implementing a number of measures, including payment deferrals, rate reductions and waivers of penalty charges and late payment fees, on credit facilities, in order to limit the impact of national measures, being instituted to contain the spread of the virus.

The CBTT said that such proposed payment deferrals will result in credit facilities becoming past due, in the context of its Impaired Assets Guideline, and will also lead to the modification of loan agreements, which are subject to limitations. The CBTT added that rate reductions will also result in the modification of loan agreements.

“However, the Central Bank considers the current circumstances to be extenuating, and notes that the proposed measures will provide flexibility to customers of financial institutions, affected by the COVID-19 pandemic, and assist also in maintaining financial institutions’ soundness,” the CBTT added.

The CBTT said it is also advising that it will relax its regulatory treatment for restructured loans, due to “skipped payments” or rate reductions and past due facilities, for a period of three months, in the first instance, for payments due by March 31.

The CBTT said that, in accordance with the Market Conduct measures, financial institutions are required to provide borrowers with accurate disclosures, when offering “skipped payments” and/or rate reductions, which will alleviate any misunderstandings, relative to the changes in the terms and conditions of the loan contract.

“The financial institution must provide customers with adequate intonation to understand the implications of a ‘skipped payment’ or payment deferral, including the consequences (if any) for the total amount payable, under the loan contract, the term of the loan, and the amount of contractual monthly instalments.”

The Central Bank said that the customer should also have no liability to pay any charge or fee, associated with the granting of the “skipped payment” or deferral arrangement.

“It should be noted that the guidance being provided on the treatment of “skipped payments” or payment deferrals, amidst the COVID-19 crisis, is restricted to the regulatory treatment of such exposures. Licensees must continue to provide for these loans, in line with international accounting standards,” the CBTT added.