Moratoria on Credit Facilities in Exceptional Circumstances  

The Legal Notice 142 of 2020  has been published directing credit and financial institutions licensed by the Malta Financial Services Authority to offer a six-month moratorium on repayments on capital and interest for borrowers who have been negatively affected by the COVID-19.

As indicated by the Media release issued by the Central Bank of Malta, and which can be accessed here:

Pursuant to these Regulations, the Central Bank of Malta issued Directive 18 to define the eligibility for the moratorium and other conditions related to the implementation of the provisions of the Regulations. The moratorium applies to credit facilities sanctioned prior to 1 March 2020 – whether to individuals, households or businesses – and who can show that they have been negatively affected by the pandemic. Applications by borrowers are to be made with their respective credit or financial institution until 30 June 2020. The Minister for Health, in consultation with the Minister for Finance and Financial Services, may decide to extend the duration of the moratorium and the duration of the application period. The six-month moratoria period will start with effect from the date of approval of the application.

The moratorium is not granted automatically, and a borrower will need to apply with the respective credit or financial institution.  Borrowers have until the 30th June 2020 to apply.  As indicated in the Directive issued by the Central Bank of Malta “If you have already taken up a moratorium offered by your lender, but feel that the terms under the Directive are more advantageous, you can renegotiate the terms subject to agreement with the credit or financial institution”.

Credit and Financial Institutions have the right to refuse the application as long as this is done within the terms of the Regulations.  Arrears prior to the 1st March 2020 are not eligible for the moratorium.

A guide  outlining the terms and conditions has also been prepared by the Central Bank of Malta.