News - News Releases 2020


Clarification: Six-month moratorium on loan repayments

The Central Bank of Malta has today issued a communication to give further guidance to banks on the treatment of accrued interest during the moratorium period.  This issue has been the subject of a number of queries by the general public and credit institutions.

During the course of the moratorium, interest is to be accrued but not capitalised, in other words no interest compounding is to occur during this period. This accrued interest would subsequently be recovered on a straight line basis (spread equally) across the remaining modified maturity term of the loan after the end of the moratorium period. Borrowers could enter into mutual agreements with their credit or financial institutions for different repayment plans - such as shorter terms and higher payments or vice versa - as long as no compounding on the deferred interest accrued during the moratorium occurs. 

The Central Bank of Malta is mindful that the above may already be an adopted practice among credit and financial institutions offering the moratorium.  However, the Central Bank of Malta felt that further clarification was in order, so as to ensure a harmonised approach.   

You can find the original press release here.

You can find the updated guidelines here.

You can find the updated Directive here.

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