Central Bank enables credit lines for SMEs at 24% per year for salary payments and check coverage

The Central Bank (BCRA) today decided on a set of rules aimed at mitigating the impact of the economic crisis generated in the productive sector as a consequence of the Covid-19 pandemic, a disease that causes the coronavirus.

According to a statement from the institution, “these measures point to the financial system being able to give more support to both companies and individuals and that the payment chain will not suffer in the coming months.”

In accordance with the provisions of the BCRA, all the financial entities of the system will be able to offer a special line of credit to micro, small and medium-sized enterprises (MiPyMEs) at a maximum annual interest rate of 24%.

In order to increase its loanable capacity, the BCRA established that entities must divest themselves of part of their position in Leliq.

In addition, in the case of the entities that activate this special line of credit, the BCRA will reduce the amount of its reserve requirements, further increasing the availability of resources for financing.

These loans are especially aimed at financing the working capital of companies in the current situation, such as payment of wages and coverage of deferred checks, said the governing body of the Argentine financial system.

“The measure as a whole, adding the loss of Leliq’s holdings held by the entities and the release of reserve requirements, generates a volume of credit to support this sector of more than 50% of current bank financing,” the statement said.

Additionally, it was reported, the release of reserve requirements was increased within the framework of the Now 12 Program financing, to encourage the consumption of families.

Debtor flexibility

On the other hand, the BCRA provided for the provisional flexibility of the parameters with which bank debtors are classified.

The current classification system takes into account, among other variables, the number of days in arrears of each debtor. From today Thursday and until September 2020, the classification of each debtor will add 60 days to each category, allowing to contemplate the difficulties caused by the crisis in various branches of economic activity.

On the other hand, to sustain the loanable capacity, the BCRA suspended until 06/30 the possibility of the distribution of results by financial institutions.

These measures approved by the BCRA board of directors are in addition to others adopted by the Executive Power in the same direction to try to alleviate the effects of the coronavirus pandemic on the economy.

The BCRA continues to monitor the evolution of the situation in order to evaluate alternatives as necessary.


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