Bank of Israel offers southern residents more credit relief
The Bank of Israel has ordered banks to allow private customers in communities surrounding Gaza to exceed their personal approved credit limit by NIS 5,000. Businesses will also be allowed to exceed their limit by NIS 5,000, or 10%, whichever is higher. The move aims to help area residents cope with economic difficulties that have resulted from the fighting.
Banks customarily charge interest rates of between prime and 5.7%, and prime and 9.6% for use of a pre-approved credit limit. With the prime interest rate currently at 3.25%, customers face a charge of more than 12% interest for pre-approved credit. And as this rate could be even higher if the pre-approved limit is exceeded, it is generally advisable to arrange for pre-approval if more credit is required, or to take out a loan to cover the difference.
Banks have recently offered loans with special terms to customers in the south, who could be facing special problems due to recurrent interruption of business activity in the area. Simultaneously, the supervisor of banks has been making moves to offer relief to residents of the south whose checks could begin to bounce. Sources say that people will not be penalized for bouncing checks so long as the conflict continues.
The regulator will be keeping an eye on January 10, when most salaried workers receive their wages. In the event that many employers are unable to pay wages, the regulator will consider additional relief measures.