Bank of Sierra Leone Creates Special Credit Facility for Covid-19 Pandemic

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Bank Governor Kelfala Kallon

By Amin Kef Sesay

According to what was understood by this Press, in the Monetary Policy Statement issued on 19th March 2020, the Bank of Sierra Leone decided to create a Special Credit Facility of Le500 billion to support the production, procurement, and distribution of essential goods and services in order to soften the expected economic impact of the COVID-19 Global Pandemic on Sierra Leone.

In that regard the BSL is issuing the following rules and procedures for administering said Facility:  The Facility (of Le500 billion) is hereby created as part of a set of measures designed to soften the negative economic impact of the COVID-19 Pandemic on Sierra Leone.

It continued that the said Facility shall remain in force until it is terminated by the BSL, subject to the proviso that the BSL shall notify the public about its termination three months prior to it being terminated.

In another development, in consultation with the Ministry of Trade and Industry, the BSL hereby publishes the attached List of Essential Goods that qualify for this Facility: Activities that lead to the production, procurement or distribution of commodities on the list shall be financed under this Facility.

Only businesses which generate at least 75 percent of their revenues from operations in Sierra Leone shall be eligible to participate in the Facility. Loan applicants who have defaulted on loans in the last five (5) years or have existing non-performing loans shall not be eligible to participate in this Facility.

Politically Exposed Persons or entities shall not participate in this Facility. Bank of Sierra Leone. In terms of responsibilities of participating commercial Banks those banks shall use their existing underwriting procedures to process loan applications under the Facility.

Besides, all applications for funding under this Facility shall be reviewed and approved by the Credit Committees of the participating commercial banks.

In addition, participating commercial banks shall ensure that loans granted under this Facility are backed by adequate collateral, which shall be registered at the Collateral Registry at the BSL.

Moreover, participating commercial banks shall submit to the Banking Supervision Department of the BSL all supporting documents used in the evaluation of approved loans under this Facility.

Finally, all relevant information on the credit history of approved applicants for loans under this Facility shall be submitted by the participating banks to the Credit Reference Bureau at the BSL for credit information purposes. When it comes to prohibited activities Funds accessed under this Facility shall not be used for any purpose other than what is stated in the loan application.

More specifically, funds disbursed under this Facility shall not be used to: a) repay any existing loans or loans contracted under any other facility. b) invest in any asset, including but not limited to money market instruments, especially government securities.

Talking about penalties for engaging in prohibited activities the penal interest rate that existed at the time the loan was approved plus a five (5) percent penalty shall constitute the lending rate for borrowers under this Facility who engage in any prohibited activity.

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