Newsletter July 2020

On 09.07.2020 the Bulgarian National Bank (BNB) approved the procedure for deferral and settlement of liabilities payable to banks and their subsidiaries – financial institutions in relation to the state of emergency enforced by the National assembly on 13 march 2020 as a result of the Covid-19 pandemic and its consequences (as stated on the site of Association of Banks in Bulgaria-Link). The rules for deferral and settlement of liabilities, set out below, shall be applicable to customers who cumulatively meet the following conditions(1):

1. Borrowers (bank customers), with the exception of credit institutions, which face or are expected to face difficulties in the repayment of their liabilities under the agreement concluded with the creditor, in relation to the COVID-19 pandemic and the restrictions enforced with the Law on the Measures and Actions during a State of Emergency, announced by a resolution of the National Assembly of 13 March 2020 and the consequences thereof;

2. As of 1 March 2020 the obligations of the customers under item 1.1 were regularly serviced or were not more that 90 days past due;

3. The customers explicitly express the desire to avail of the concessions offered by the creditor.

Detailed information on the individual rescheduling mechanisms is presented on the website of the Association of Banks in Bulgaria. It is possible for consumers to take advantage of the mechanism for deferral of principal and interest for up to 6 months, but not later than 31.03.2021. This includes a new repayment plan for a period of up to 6 months longer than the original, depending on the number of deferred installments. If this deferral mechanism is chosen, then until the expiry of the loan term or the specified other term agreed with the borrower, the interest due during the grace period shall be added in equal parts to the respective installments due.

The choice of deferral mechanism is made by mutual consent of the borrower and the bank.

(1)Ibidem.