The government has agreed to again extend the loan repayment timelines for troubled manufacturers, the Economy minister said.
According to Ehsan Khandouzi, the National Coronavirus Headquarters has extended the deadline to the fiscal yearend in March 2022, IBENA reported.
The government has already granted three rounds of loan deferment to manufacturers impacted by the pandemic. The first time was in March and again in September after production companies said they could not pay due to the coronavirus-related complications that have wiped out many SMEs and forced others to furlough or down shutters.
As if the devastation unleashed by Covid-19 was not enough, rising raw material prices, chaos in the forex market, galloping inflation and the plunging purchasing power of the large segment of the society have added to the plight of both manufactures and business.
As per a decision approved earlier by Money and Credit Council, banks are obliged to bear with the manufacturers' inability to meet their financial commitments, all or part of which are categorized under the moratorium for non-performing loans for five years.
Struggling debtors can use this grace period only once, albeit after reimbursing 7.5% of the total debt. The restructuring is for natural persons whose arrears don't exceed 5 billion rials and for legal entities with a maximum arrears of 20 billion rials.
The decision is backed by the Majlis legislation of July 2019, based on which compound interest on loans was canceled. The law covers loans that matured in the end of fiscal 2019-20 and debtors were initially given until the end of that year (March 2020) to repay.
The first deadline coincided with the coronavirus outbreak in Iran largely hammering SMEs. Manufactures in no small number had either downed shutters or were on the verge of insolvency due to the loans, among the other challenges mentioned above.
They were neither able to repay their debts nor allowed to apply for new loans to stay afloat.
