CMF Extends Treatment of Provisions for Loan Rescheduling Amid Crisis
CMF decided to extend, until August 31, 2020, part of the temporary measures for the treatment of credit risk provisions applicable to banks and supervised savings and credit cooperatives. CMF had announced these measures in April 2020 to ease the impact of COVID-19 outbreak and these measures had been scheduled to expire on July 31, 2020. CMF also published a report on the performance of supervised banks and cooperatives as of June 2020. In addition to the usual information, the performance report includes a review of the COVID-19 guaranteed loans granted under Guarantee Fund for Small Entrepreneurs (FOGAPE) at the end of the first half of 2020.
The temporary measures that were announced to ease the impact of COVID-19 outbreak allow banks and cooperatives not to consider increased provisions for loan installments that are rescheduled under this special treatment. The one-month extension on this treatment will apply to housing and commercial loans. The aim of the measures is to facilitate loan rescheduling for debtors that have been affected by the COVID-19 pandemic, but still have the capacity to pay in the future. This special treatment provided by CMF does not relieve financial institutions of the responsibility to conduct an adequate assessment of their credit and liquidity risk management, which is necessary to avoid compromising the financial strength.
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Keywords: Americas, Chile, Banking, COVID-19, Credit Risk, Liquidity Risk, Payment Deferrals, Loan Moratorium, Loan Guarantee, FOGAPE, CMF
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