5.4.3 Forbearance activities

To resolve or limit the impact of NPEs, credit institutions should explore the possibilities with regard to granting forbearance measures. Credit institutions should monitor two aspects of the forbearance activities, efficiency and effectiveness. Section 7 specifies the requirements relating to the application of forbearance measures.

The main objective of forbearance measures should be the return of the borrower to a sustainable performing repayment status, taking into account the amount due and minimising expected losses. This objectives should take into account the importance of ensuring the fair treatment of consumers and compliance with any consumer protection requirements that may be applicable. The credit institution should monitor the quality of the forbearance activities to make sure that they are not used to delay impairments or an assessment that the exposure is uncollectable. The monitoring should cover forbearance activities in relation to both performing and non-performing exposures.