Increase in high risk loans has resulted in a huge increase in level of bad debts and write-offs - Ram

The Association of Banks in Fiji says a substantial increase in high-risk loans has resulted in a huge increase in the level of bad debts and write-offs.

Association Chairman Rakesh Ram says banks are a commercial businesses and like any other business they have had a significant impact on its operations and financial performance.

He says the banks recognize that a high level of lending losses has the potential to impact the regulatory capital adequacy of the banks.

Ram says RBF maintains a close supervisory oversight to ensure that all banks remain adequately capitalized in order to maintain Fiji’s financial system and economic stability.

He has also highlighted that commercial banks new lending has increased to $2 billion as at April this year but the banks average lending rates are on a continuous decline.

The Chairman says this is indeed encouraging in terms of supporting businesses meet their cost of borrowing and a clear confirmation that banks have been passing the benefit of reduced interest cost to the customers.

The Association has also welcomed the record liquidity levels in the market, which confirms Fiji’s strong banking and financial sector fundamentals.

According to the Reserve Bank of Fiji, banking system liquidity remains ample at $1.693 billion.

Ram says the banks continue to lend money to the viable and priority sectors and at acceptable financial costs despite the elevated credit risk in a most challenging business environment.

The Chairman says banks have borrowed funds from their depositors to lend and therefore the banks have that underlying responsibility to ensure their funds are always protected by indulging in responsible lending activities.

The Chairman adds that the banks will continue to support their customers in a responsible manner based on individual needs during this most difficult time.

He says commercial banks have continued to assist customers who have been impacted by the pandemic either directly and indirectly.

Ram says this hardship assistance, which began in last year is still continuing and the banks have voluntarily extended the hardship assistance till September 2021 on a case by case basis.

This includes interest and principal repayment deferment, restructures and short-term funding for customers who are facing financial hardship during this most challenging time in our country’s history.

He adds customers should contact their relationship or branch managers to discuss their current financial position and mutually agree to an action plan for mutual benefit.