As Coronavirus Takes Toll; Businesses Given 3-Month Grace Period

EghtesadOnline: The Money and Credit Council -- the top finance and banking policymaker -- agreed on Wednesday to postpone repayment of loans to mitigate the effect of new coronavirus on businesses.

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07 March 2020

The decision came on the heels of calls by manufactures and business owners  struggling with financial problems  emanating from the contagious disease, according to a notice seen on the website of the Central Bank of Iran.

As per the MCCdecision, borrowers have been exempt from paying their monthly loan installments for up to three months starting from the end of the ongoing calendar month till May 21, Financial Tribune reported.

Borrowers who have to clear their debts in a lump sum have been given a grace period of three months to meet their financial commitments to banks.

The adjustments, however, do not include overdue arrears and merely cover current liabilities.

Banks and credit institutions will not charge penalties or extra fees on borrowers due to the MCC-mandated repayment delays. They also are prohibited from placing customers on the list of defaulters.

Many businesses are either closed, work at half capacity or have sent workers home on compulsory leave beacseu of the spreading virus. People in most cities and towns are very anxious and fearful about the disease, and many prefer to stay at home as has been regularly announced by the government and senior health officials.

Iran confirmed more than 2,922 corona cases on Wednesday with the death toll rising to 92. Health officials also said that 552 patients had recovered and sent home since the virus outbreak two weeks ago.

The infection, which was first reported in China in December, has caused an outbreak of dangerous and infectious respiratory illness also known as COVID-19.

The pandemic has mainly hit the hospitability and tourism industry as hotels, tour operators, airlines and travel companies report cancellations on a massive scale unseen in recent history.

The infection is also taking a toll on restaurants and food-related businesses. Many manufactures have been forced to cut their workforce, scale-down production or completely shut down.

Appeal From Companies

On Tuesday, the representatives of private sector businesses wrote to President Hassan Rouhani, asking the government to adopt supportive measures to protect businesses, especially SMEs against financial losses posed by the coronavirus.

The appeal focused on extending the maturity dates of loans to late September without penalties, giving low-interest working capital loans to manufactures and extending strict deadlines that employers must meet for paying their monthly share of social and medical insurance premium.

The list further includes tax mitigation and tax exemption on businesses income in the fiscal year that ends on March 19, postponing repayment of money owed to the Social Security Organization for at least eight months and granting cheap loans to the people to boost purchasing power.

They also asked the government to ease border restrictions and closures that have rendered exports difficult and in many cases impossible. Flights to and from Iran have also been disrupted as many airlines suspended air travel because of the infectious disease.