MORATORIUM ON CREDIT FACILITIES IN EXCEPTIONAL CIRCUMSTANCES REGULATIONS

MORATORIUM ON CREDIT FACILITIES IN

EXCEPTIONAL CIRCUMSTANCES

SUBSIDIARY LEGISLATION 465.40

MORATORIUM ON CREDIT FACILITIES IN

EXCEPTIONAL CIRCUMSTANCES REGULATIONS

13rd April, 2020

LEGAL NOTICE 142 of 2020, as amended Legal Notice 15 of 2021.

PART I

Preliminary

(1)

The title of these regulations is the Moratorium on

Credit Facilities in Exceptional Circumstances Regulations.

(2)

The scope of these regulations is to regulate the

provision by credit and financial institutions of a moratorium on credit

facilities, to support economically vulnerable persons who have been

materially affected by the COVID-19 outbreak.

In these regulations, unless the context otherwise

requires –

"Act" means the Public Health Act;

"bank" or "credit institution" shall have the same meaning

assigned to it in the Banking Act and includes any branch, agency or

office in Malta of a bank or credit institution not incorporated in

Malta;

"Central Bank" means the Central Bank of Malta as defined by

the Central Bank of Malta Act;

"credit facility" means the lending of a sum of money by way of

an advance, overdraft, or loan, or any other line of credit including

discounting of bills of exchange and promissory notes, guarantees,

indemnities, acceptances and bills of exchange endorsed pour aval.

Credit cards are excluded from these regulations;

"competent authority" means the Malta Financial Services

Authority established by the Malta Financial Services Authority Act;

"financial institution" shall have the same meaning assigned to

it in the Financial Institutions Act;

"Minister" means the Minister responsible for public health;

"moratorium" means deferral of payments of capital and interest

from credit facilities granted by credit and financial institutions.

These regulations are applicable to credit institutions

licensed by the competent authority in Malta under the Banking Act

and to financial institutions under the Financial Institutions Act.

MORATORIUM ON CREDIT FACILITIES IN

EXCEPTIONAL CIRCUMSTANCE

(1)

For the purposes of these regulations, the COVID-

19 outbreak is formally recognised as a serious disturbance to the

Maltese economy, within the meaning of article 107 of the Treaty on

the Functioning of the European Union, which as a consequence also

seriously threatens financial stability in Malta.

(2)

Pursuant to article 107 of the Treaty on the Functioning of

the European Union, these regulations establish a temporary

moratorium to be applied by credit and financial institutions on credit

facilities, to support economically vulnerable persons who have been

materially affected by the exceptional circumstances brought about by

COVID-19 outbreak.

(1)

Credit and financial institutions shall grant a

moratorium on capital and interest, unless the borrower decides to

continue to pay the relevant interest, applicable to all credit facilities

satisfying the eligibility criteria established under a directive issued by

the Central Bank, with the exception of credit facilities to other credit

and financial institutions.

(2)

The duration of the moratorium shall be for a period not

exceeding nine (9) months

Provided that the Minister may, after consultation with

the Minister for Finance and Employment, extend the duration of the

moratorium by notice published in the Gazette.

Applications shall be made during the period until 31 st

(3)

March 2021, unless the Minister, after consultation with the Minister

for Finance and Employment, decides to extend the duration of the

application period.

(4)

Applicants granted a moratorium pursuant to the

Moratorium on Credit Facilities in Exceptional Circumstances

Regulations and the Moratorium on Credit Facilities in Exceptional

Circumstances (Extension) Regulations, are eligible to apply for an

extension of the moratorium under these regulations, provided that

this extension does not lead, in aggregate, to a moratorium period in

excess of nine (9) months.

(5)

The extension referred to in sub-regulation (4) shall

require submission of an application for extension, with the period for

applications ending on 31 st March 2021.

PART II

Eligible Applicants

Eligibility for the moratorium will be defined in a

directive issued by the Central Bank.

PART III

MORATORIUM ON CREDIT FACILITIES IN

EXCEPTIONAL CIRCUMSTANCES

General

(1)

The Central Bank may issue, amend or revoke

directives as may be required in respect of any provisions of these

regulations, including, without prejudice to the generality of the

aforesaid, criteria for financial distress and assessment of applications.

(2)

Directives issued by the Central Bank may be in the

English language only.

(1)

Where any credit or financial institution falling

within the scope of these regulations fails to comply with any

provisions of such regulations, or to any directive issued thereunder,

the Central Bank may, by notice in writing and without recourse to a

court hearing, impose on such credit or financial institution an

administrative penalty and other administrative measures in

accordance with the provisions of the Central Bank of Malta Act.

(2)

A right of appeal to the Financial Services Tribunal shall

lie from the decisions which the Central Bank shall take under these

regulations and the provisions of articles 56 and 57 of the Central

Bank of Malta Act shall apply mutatis mutandis.

(1)

Credit and financial institutions are obliged to

collect specific information as defined in a directive issued by the

Central Bank.

(2)

This information shall be reported to the competent

authority and shall clearly identify all obligors and exposures eligible

to the moratorium, and obligors and exposures where the moratorium

was actually applied. This information shall include any financial

impact on the credit or financial institution resulting from the

application of the moratorium.

(3) The competent authority shall have the right to verify the

accuracy of the information submitted under this regulation by

requiring submission of documents and obtaining written or oral

explanations, in line with the provisions of the Banking Act.