COVID-19 EMERGENCY BENEFITS FOR MICROCREDITS, SMALL BUSINESS AND CONSUMER
Banks and Credit Unions will offer benefits to alleviate the pressure of the credit obligations of their clients, with less liquidity at home, due to the emergency of COVID-19.
In Ecuador are 24 banks, 16 of them are part of Ecuador’s Private Banks Association (ASOBANCA) who announced on Monday 16th that they will postpone collection of loan payments from three types of beneficiaries for up to 60 days.
In the first group are customers with personal consumer loans; for example, for buying cars, paying for a trip, furnishing the house and others.
In the second group are microcredits; those that are delivered to natural or legal persons with sales of up to USD 100,000; and, in the third, loans to small companies.
The conditions of the amortization tables will also be refinanced for these groups. The Monetary Policy and Regulation Board does not need to issue a resolution to implement these decisions, which must be applied immediately.
ASOBANCA explained that credit card debts, mortgage loans and credit operations of medium and large companies will not receive the deferment of repayments benefit.
Notwithstanding, each bank will assess the creditor's situation and decide whether to offer the refinance benefit.
Julio José Prado said that some banks decided to include obligations with credit cards, which is part of the strategy of each financial institution and not a joint decision as an Association. ‘’Each bank will offer benefits as it is possible’’, said. For example, Banco Guayaquil, will include credit card debts in the two financing benefits. Prado explained that the measure to extend the charging fees will vary according to the cut-off date of each operation. "There are clients who were charged just the day we announced the decision, but the idea is that two fess are allowed to be postponed, that will be adjusted, we ask for patience from the clients."
Gonzalo Paredes, professor at Universidad Católica Santiago de Guayaquil, worries that these measures are possible because of the high levels of provisions of the banks, which are the highest in the region.
The Union of Southern Credit Unions (UCACSUR), which groups 15 Credit Unions that represent 30% of the assets of the popular and solidarity economy, will also give a grace for the credit union fees up to 90 days.
Juan Pablo Guerra, UCACSUR manager, explained that each credit union will analyze what type of credit and from when will it apply. "We hope that when this state of emergency ends, the members will approach the credit unions to analyze their cases. We have made this decision because several of the partners are micro entrepreneurs who earn from daily work and will not be able to have the expected income, ”Guerra said.
Private financial institutions will continue working during the state of emergency at the cashier’s but urged clients to prefer the use of online banking or telephone banking. Banco Guayaquil reported that all its agencies are operating 100% with measures such as telecommuting, disinfection at each workstation and medical dispensaries for its workers.
Andrés Michelena, Minister of Telecommunications, suggested that banks reduce the fees for virtual banking services, as growth in transactions is expected, but ASOBANCA said they do not contemplate that measure because most digital services are already subsidized.
In the meantime, Procredit reported that 60% of its employees took up telecommuting. Of the remaining 40%, most have a vehicle and another group lives close to the agencies. For those who do not have transportation means, the bank arranged their own private cars to move their employees.
The EcuaAssist Team