As Montenegro had become the latest country in the region to be struck down by the unfortunate developments regarding the COVID-19 outbreak, the Central Bank of Montenegro adopted the Decision on Temporary measures for mitigating the negative effects of new coronavirus on the financial system, effective from 20 March 2020 and available on the official website of CBM.
The decision provides for moratorium on loans, which applies to all debtors – individuals, entrepreneurs, companies and other borrowers. It means there is a standstill period in repayment of up to 90 days.
The effectiveness of the moratorium would not be subject to the prior conclusion of the annex to the loan agreement. In order to exercise its right, the debtor is required to notify the bank (electronically or in written form) upon its acceptance of the moratorium, while the banks are obliged to ensure the effectiveness of the moratorium in no later than 5 business days as of the day of receipt of such notification.
In order to achieve the full transparency of the process, the Decision introduced the requirements for the banks to publish the notification on moratorium rights on their official websites by 30 March 2020.
These provisions also apply to leasing operations, as well as to the MFIs and their borrowers.
In addition, the Central Bank explained that the moratorium will mean the extension of the repayment period for the time for which it is introduced (up to 90 days). With regards to the interest calculated during the moratorium period, it will be accrued to the debt and equally divided to the remaining repayment period, including the extension period arisen out of moratorium.
In order to achieve the adequate understandability of these rules, the Central Bank published several samples of the moratorium effects to the loans of individuals on its official website.
In case of any question or a need for further information in this respect, feel free to contact our team.