The National Bank of Serbia has provided an additional moratorium on loan repayment

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The National Bank of Serbia has adopted new decisions on the delay (moratorium) of obligations based on loans and leasing, as follows:

1) Decision on interim measures for banks to mitigate the consequences of the COVID-19 pandemic with the aim to preserve the stability of the financial system;
2) Decision on interim measures for financial leasing providers to mitigate the consequences of the COVID-19 pandemic with the aim to preserve the stability of the financial system.

The decisions prescribe another delay in the repayment of debtors’ liabilities: (a) borrowers and (b) beneficiaries of financial leasing, maturing in the period from 1 August to 30 September 2020, including outstanding liabilities that matured in July 2020. The content of the decisions is almost identical, save that the first refers to banks and the second to leasing companies.

Below is a consolidated summary of their content:

Offer for delay in repayment of obligations:

Banks and lessors were obliged to, no later than 31 July 2020, offer debtors/lessees (individuals, farmers, entrepreneurs, and companies) a delay in repayment of obligations (moratorium).
Banks and lessors publish the notice of the offer on their websites, whereby it is considered that the same has been delivered to all debtors/lessees.

If the debtor/lessee does not decline the offer within 10 days from the date of publication of the notice, it will be considered as acceptance of the same. All debtors who decline to accept the proposed moratorium are required to notify the bank/lessor within the above deadline. The offer can be rejected electronically, by regular mail, by phone or at the business premises of the bank/lessor. Also, the debtor may waive the application of the moratorium during its duration in the previously described manner or by paying in full due but unpaid obligations.

Products of the bank to which the moratorium is (not) applied:

The decision regarding banks stipulates that the moratorium applies to obligations of the debtor based on loans and credit products (e.g. allowed overdraft on current account or credit card), as well as on obligations under other products of the bank (e.g. obligations under protection instruments from interest rate risk associated with loans and/or credit products or based on bank guarantees). On the other hand, the moratorium does not apply to fees for bank services, such as payment services (e.g. transaction fees, account maintenance fees), investment services, broker-dealer operations, safe deposit box services, etc.

Interest calculation:

During the moratorium, the bank/lessor charges regular (agreed) interest. The bank (lessor) calculates the regular (agreed) interest on the outstanding debt (which does not include liabilities due during the moratorium) and the interest thus calculated corresponds to the amount of regular interest in accordance with the repayment plan valid before the decisions of the NBS came into force.

Exceptionally, for a debtor company, the bank/lessor may charge regular (agreed) interest on the principal amounts of the debt that mature during the moratorium.
During the moratorium, the bank charges regular (agreed) interest on the used amount on credit card liabilities and current account overdrafts.

In addition during the moratorium, default interest is not calculated on the unsettled claim due during the moratorium, the enforcement procedure is not initiated, nor the forced collection procedure against the debtor, i.e. no other legal actions are taken to collect claims from the debtor.

Termination of the moratorium:

Upon termination of the moratorium, regular repayment of obligations continues, with extension of the repayment period by the number of months of application of the moratorium, and the calculated regular interest in the above manner is not attributed to the debt principal but is evenly distributed over the remaining repayment period. Default interest calculated during the period of the moratorium on claims due before the moratorium will be distributed over the period of repayment of liabilities and will not be attributed to the main debt.

The bank/lessor will draw up a new repayment plan for obligations extended for the duration of the moratorium and deliver it to the debtor by e-mail or regular mail, at no additional cost to the debtor. When submitting the repayment plan, the bank/financial leasing provider must clearly present to the debtor other possible repayment methods, as well as the deadline within which the debtor may request a different repayment method upon termination of the moratorium.

After submitting the repayment plan, the debtor may, within 7 days, request from the bank/lessor that instead of the defined repayment method, upon termination of the moratorium:
1. settle all obligations that were covered by the moratorium (all annuities from the moratorium period – principal and regular interest); or
2. settle all obligations based on regular interest calculated during the moratorium, with the extension of the repayment period for the period of the moratorium.

Standing orders and administrative bans:

With entry into force of the Decision on interim measures for banks, all payments of debtors’ obligations covered by the moratorium were suspended, according to all standing orders. All debtors who decline the moratorium will have their standing orders reactivated and the regular loan repayment will continue as if the standing order had not been revoked. If the debtors subsequently (after 10 August) decide to decline the moratorium, they will be able to do so without any consequences. In case of refusal to accept the moratorium by the lessee, the lessor is obliged, without delay, to inform the bank through which the payment is made through a standing order, so that the payment would not be suspended, i.e. to reactivate the standing order and execute the payment to the lessor.

The same applies to debtors of banks/lessors who settle their obligations through an administrative ban – employers, i.e. the Republic Pension and Disability Insurance Fund (“RPDIF”) should also suspend the transfer of funds until the bank/lessor notifies them that the debtor declined the moratorium. Namely, if repayment of the debtor’s obligation who informed the bank/lessor to decline the offer is made through an administrative ban, the bank/lessor is obliged to immediately notify the employer/RPDIF, in order to execute payment in the amount that would be paid if the administrative ban had not been lifted.

Upon receipt of the notification from the bank/lessor that the debtor has waived the moratorium, the employer/RPDIF should make a transfer based on the obligations due after entry into force of the decisions in the same amount as if the administrative ban had not been lifted and reactivate the administrative ban. If the debtor’s employer or the RPDIF still transfers funds on the basis of an administrative ban (within the regular repayment of obligations during the moratorium), and the debtor has accepted the moratorium – the bank/lessor is obliged to allow the debtor to dispose of these funds as soon as possible, through payment or transfer to the debtor’s account with another bank.