The National Bank of Kyrgyzstan recommended commercial banks to consider the possibility of revising the terms and conditions of previously issued loans in foreign currency through restructuring or conversion.
The central bank noted that the decision was made due to the high volatility of the exchange rate, which has a negative impact on the financial condition of borrowers, and the growing need of small and medium-sized businesses in support measures aimed at limiting the growth of overdue debt under loan agreements.
The bank reminds that the restructuring can be carried out based on the borrower’s application by granting new conditions to the borrower on an individual basis (change of interest rate and/or term of the loan and others), which must be executed in accordance with the loan agreement. In addition, it is granted for all types of loans to both individuals and legal entities, provided that the borrower has financial difficulties with repayment of the loan.
«In case of problems with loan repayment, borrowers are advised to apply to the relevant commercial bank for restructuring. In this case, confirmation of financial difficulties in servicing a loan in foreign currency is up to the borrower (providing documents, certificates and any other information),» the statement says.
The National Bank also stressed that for qualitative restructuring a commercial bank should conduct an analysis of the current financial condition and assessment of the borrower’s activities. On this basis, the commercial bank will be able to propose a restructuring plan taking into account the borrower’s real ability to meet its obligations under the amended loan terms.
«On the basis of the borrower’s application/request, commercial banks may consider changing (converting) the currency of the loan. Currency of the loan is changed on terms agreed by the parties and with the consent of the borrower only,» the National Bank concluded.
