Moratorium on Credit Facilities in Exceptional Circumstances Regulations
By means of the Moratorium on Credit Facilities in Exceptional Circumstances Regulations, 2020 (Legal Notice 142 of 2020) (the ‘Regulations’), and with the aim of mitigating the serious disturbance to the Maltese economy which threatens the financial stability of Malta, credit and financial institutions have been obliged to grant a moratorium on capital and interest. The measure is meant to soften the financial impact on applicants who can prove that their income has or will be materially affected by the COVID-19 outbreak.
The moratorium of a period of six months (unless extended further by the Minister responsible for Public Health) is applicable to all eligible credit facilities as defined in Central Bank of Malta Directive 18 unless the borrower opts to continue effecting the relevant interest. The moratorium is subject to, inter alia, the following conditions:
- The credit facility/ies must have been sanctioned prior to March 2020;
- Applicants must demonstrate that their ability to repay the loan has been materially impacted by the COVID-19 outbreak;
- No other suspension, which is unrelated to the COVID-19 outbreak, must have been offered by the institution before this date;
- Borrowers must not be in arrears with the repayment of the credit facility as at 1 March 2020.
In the case of borrowers who had agreed to a moratorium prior to the coming into force of the Regulations, they may, at their option, renegotiate the terms agreed therein in order to align them with the provisions of the Regulation. Applications should be received by the relevant credit institution/s by not later than 30 June 2020.
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