APRA extends regulatory relief for COVID loan deferrals

APRA has confirmed the final version of its prudential standard outlining regulatory support for loans impacted by COVID-19, which include a temporary prudential treatment for loan deferrals.

Banks with total loans subject to deferral above a minimum threshold of $50 million and 50 facilities will also need to report data on the loans, under Reporting Form ARF 932.2 COVID-19 Repayment Deferrals.

The threshold had been raised from $20 million and 20 facilities previously, with APRA aiming to ease reporting obligations for smaller banks.

APRA has called for the banks to publicly disclose the nature and terms of repayment deferrals and the volume of loans to which they are applied, as it required in 2020.

Under APRA’s regulatory relief for loans impacted by COVID, banks will not need to treat a repayment deferral as a period of arrears or a loan restructuring, whether or not the borrower has previously been granted a repayment deferral.

The measure will apply to banks offering support to retail and small-business customers, with less than $10 million in total debt facilities outstanding and with loans that are not 90 days past-due or impaired at the time of repayment deferral.

An authorised deposit-taking institute (ADI) will be allowed to pause the counting of days past-due from the date on which the repayment deferral is granted – until the relief period ends on 30 September.

The regulatory allowance has been implemented through adjustments to Prudential Standard APS 220.

The regulator has extended the duration period of the scheme, to cover deferrals granted from 8 July until the end of September, instead of the initial deadline of 31 August.

The new standards also allow the regulator to extend the period or specify new time frames by notifiable instrument.

APRA extended the time frame after it received five submissions in a week-long consultation, which primarily focused on the periods for support.

One submission called for the temporary scheme to be extended beyond exposures to small business, home loans and other retail customers – but APRA rejected the notion.

Another submission had requested for the public disclosure on requirement to be removed, suggesting that APRA instead publish the data it collected.

The regulator responded by saying that while it may decide to publish data, it does not consider it to be a substitute for timely disclosure from the banks.

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