Suspension of loan and lease instalments until the end of the year 202031 March 2020
The Romanian Government has adopted the Emergency Ordinance no. 37/2020 (“GEO no. 37/2020“) enacting relief measures applicable to loans and leases contracted by certain categories of debtors. This comes as an additional support measure granted for the benefit of individuals and entrepreneurs affected by the state of emergency and by the implementation of the measures to prevent the spread of the SARS-CoV-2 virus.
The key measure of GEO no. 37/2020 is the right of borrowers to temporarily suspend, upon their request, the payment of instalments from loan or leasing agreements.
Beneficiaries and Criteria
The beneficiaries of the scheme may be persons from the following categories:
» individuals (consumers),
» self-employed persons (PFA), individual or family enterprises, independent professionals, as well as trade companies (including SMEs), as long as they are not in insolvency, have partly or totally interrupted their activity based on the decisions issued by the authorities and hold an Emergency Situation Certificate.
In order to qualify for the benefits brought by GEO no. 37/2020, the following criteria must be met:
» the relevant loan or leasing agreement must have not reached maturity nor are there overdue and unpaid obligations arising out of it;
» the lender must not have previously accelerated the loan or the lease;
» the borrower’s income must have been directly or indirectly affected by the pandemic caused by the SARS-CoV-2 virus.
The procedure for suspending instalments arising from loan or leasing agreements involves the following steps:
» the debtor that wishes to suspend the payment of the instalments must send a request in this respect to the lender (whether the bank or NBFI);
» the request can be made in writing, electronically or even by telephone, within 45 days from the enactment of GEO no. 37/2020;
» the lender shall analyze the request and approve it under the conditions provided in the implementing regulations of GEO no. 37/2020.
Consequences of the Suspension of Instalments
The maximum duration for which the payment of instalments can be suspended (i.e. the moment until which the payment of the instalments that will become due for payment in the near future can be postponed) is of up to nine months, but no later than 31 December 2020.
The suspension of instalments has the following consequences:
» the loan/lease’s duration will be extended by a period equal to that of the suspension;
» the interest that would have otherwise become due during the period of suspension will be accrued and will be added to the principal amount of the loan or leasing agreement;
» the outstanding principal amount (including the accrued interest), will be paid in instalments over the entire maturity period of the loan/lease, as extended by a duration equal to that of the period of suspension.
The measures do not imply any debt write off (principal, interest and/or fees), but only a suspension of payment. The accrual of the interest that should have been paid during the period when the loan or the lease is suspended means that such interest: (i) will become part of the principal amount, (ii) will have to be paid after the suspension ends, and (iii) will bear interest.
Special provisions apply to mortgage loans, as follows:
» the interest that would have been owed for the duration of the suspension will not be accrued to the principal amount;
» this interest shall form a new, interest-free loan, distinct from the main obligation;
» the new loan (represented by the interest not paid during the suspension) will have to be paid in a maximum of 60 monthly instalments, starting with the month when the suspension ended;
» the payment of this new loan will be guaranteed by the Romanian state through FNGCIMM (the National Credit Guarantee Fund for SMEs), the necessary funds being covered from the State budget.
The implementing norms detailing the implementation methodology are expected by April 14, 2020.
 Government Emergency Ordinance no. 37 as of March 30th, 2020, concerning the granting of facilities for loans granted by credit institutions and non-banking financial institutions to certain categories of borrowers, published in the Official Gazette no. 261 from March 30th, 2020, in force from the same date.