Monday, 08 February 2021 22:43

Tourist transporters demand redress for repayment of vehicle leasing Featured

All licensed non-bank financial institutions (NBFIs) including leasing companies have been warned of stern regulatory action for the failure to grant concessions including a debt moratorium granted to tourism sector employees in recovering their loan instalment with interest in accordance with Central Bank circulars.

The newly established Financial Consumer Relations Department of the Central Bank has informed all licensed NBFIs and banks to extend the moratorium granted to the COVID -19 hit tourism sector for a further six months from October 2020 to April 1, 2021.

Further it should recover the instalment for leasing facilities with interest given to purchase vehicles without burdening borrowers now suffering without considerable income.

The terms and conditions of recoveries without imposing any additional fine for late repayments should be arranged in consultations and compromise with those debtors by considering their present plight, the department said.

This directive was issued by the department in a letter to NBFIs in response to a letter of demand sent to the Central Bank and the Treasury on behalf of the “Association to Support all the Tourism Workers” dated 13-01 -2021.

Members of the association alleged that certain NBFI’s are forcing them to convert their leasing facility to term loans with compound interest of 11.5 per cent and resume the repayment of instalments from April this year.

They urged the Central Bank to extend the moratorium for leasing facilities for vehicles till March 31, 2022.

In the letter of demand, the aggrieved tourism transport facilitators claimed that the Central Bank in its clause 2 of circular No 9 of 2020 dated 30.09.2020 has directed the NBFIs to convert the capital and interest due to a term loan amalgamating the capital and interest falling due during the moratorium period and charge the interest rate not exceeding the latest interest rate of 364 days treasury bills.

Under this set up some of these NBFIs are forcing aggrieved debtors to pay an interest not only on the same capital under the term loan but also an additional interest paid for the remaining capital under the existing financial facility obtained by them.

Therefore debtors request the authorities to remove the complicated procedure of converting the leasing facility to a term loan and introduce a repayment scheme.

In its response, the Financial Consumer Relations Department of the Central Bank note that the request made by the aggrieved tourism sector to further extend the moratorium up to March 31, 2022 has been referred to the Tourism Development Authority for necessary action.

The demand to cancel the action to convert the leasing facility to term loan during the moratorium period will have to be considered by the Finance Ministry, the department said

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