The State Bank of Pakistan has relaxed the loan repayment facility for the affected borrowers of microfinance banks by revising the criteria for the classification of assets and the provisioning of requirements under the Deferred and Restructured Portfolio (DRP).
The banking regulatory has provided a relaxation of 30 days for the repayment of loans to the affected borrowers under the four categories that will ease them to make loan payments to the bank while avoiding extra interest.
- Under the category of Other Assets Especially Mentioned (OAEM), a loan (principal/mark-up) is overdue for 60 days or more, but less than 90 days.
- Under the category of Substandard, a loan (principal/mark-up) is overdue for 90 days or more, but less than 120 days.
- Under the category of Doubtful, a loan (principal/mark-up) is overdue for 90 days or more, but less than 120 days.
- Under the category of Loss, a loan (principal/mark-up) is overdue for 210 days or more.
The outstanding DRP loans will be re-classified on the date of the issuance of this circular. The relaxation will be available for DRP until 31 March 2022.
The notification detailed that with a 30-day increase in the OAEM category, unrealized interest/profit/mark-up/service charges on the NPLs of the DRP will now be suspended and credited to the interest suspense account on the sixtieth day.
Accordingly, the interest/profit/mark-up/service charges that have already been suspended will be allowed to be reversed if a loan does not fall under a classified category due to increased time in the OAEM category on the date of the issuance of this circular.