The Bank of Israel scolds banks that rushed to take advantage of the Corona crisis and raised interest rates on loans they offer to the public that groan from the liquidity crisis and the huge downturn of the economy: "Take into account customer needs even if profits are hit," the Bank of Israel says.The Supervisor of Banks, Hedva Bar, sent a letter to the bank's heads last night, stating: "The expectation is that the banks will continue to provide credit to borrowers in all sectors of the economy during this period, with emphasis on borrowers in the small and medium-sized businesses and households, and will avoid tightening conditions." In her letter to the Supervisor of Banks, Hedva Bar, wrote to the heads of the banking system, among other things: Corona crisis.
"I reiterate that the supervisory expectation is that banks will continue to provide credit to borrowers in all sectors of the economy during this period, with emphasis on borrowers in the small and medium-sized business and households, avoiding unnecessary underwriting conditions, although there is no need to reduce the need for underwriting and responsible credit. Presented in an analysis published by the Bank of Israel on March 30, 2020, developments in the capital markets have increased the cost of sources of credit and increased the risk in much of the credit portfolio. The needs of the economy and the customers, even if it will hurt Against this background, I again urge you to re-examine the loan pricing policy at this time, and in particular to clients whose crisis evening has been paying off as usual and whose difficulty is likely to be liquid in nature. "
Bar's letter came against the backdrop of raising interest rates on loans (including interest on mortgages) from banks since the crisis began.
Bar details the steps taken so far: "The Corona crisis has met the banking system when it is in solid condition and has enjoyed capital and liquidity thanks to responsible conduct over the past years. The banking system is a major credit provider in the Israeli economy, and for households and small businesses - almost exclusively. As the crisis broke out, we approached you, the Governor of the Bank of Israel and myself, and made it clear that it is essential that the banking system continue to inject credit into the economy and support the ability of businesses and households to overcome the crisis.
"At the same time, the Banking Supervision Department has taken a number of significant steps to support the ability of the banking system to continue to increase credit supply, in particular - reducing capital requirements, which have provided sources of significant credit expansion to the economy; Accounting as problematic debt restructuring. In addition, the Bank of Israel's Monetary Committee announced the purchase of NIS 50 billion in government bonds, which eases credit terms and liquidity in the economy. "