A watered down version of APRA’s tolerance for the upswing in forbearance and loan deferrals across the industry is being prepared.

APRA said it is providing regulatory relief “to assist ADIs in supporting their customers through this period”.

For eligible borrowers, ADIs will not need to treat the period of deferral as a period of arrears or a loan restructuring. This concession will apply to loans that are granted a repayment deferral of up to three months before the end of August 2021.

“This will provide banks and borrowers with additional flexibility to manage the period ahead, APRA said.

The measures apply regardless of whether or not the borrower has previously been granted a repayment deferral due to the impact of the pandemic.

“For transparency, APRA will require ADIs to publicly disclose and report the nature and terms of any repayment deferrals and the volume of loans to which they are applied.”

APRA is still figuring out the manner and detail with which it will consolidate industry and report for the benefit of the market and depositors, but it seems this may track a lesser list of banks than featured in the (discontinued) monthly reporting.

At the end of March, APRA reported on temporary loan repayment deferrals due to COVID-19, up to February 2021.

At the time, a total of A$14 billion worth of loans were on temporary repayment deferrals, which was around 0.5 per cent of total loans outstanding, down from more than $260 billion in May 2021, the opening stanza of the Covid panic in Australia.

ADIs must also still continue to provision for these loans under relevant accounting standards.

Yesterday’s announcement was anticipated, and largely mirrors the temporary support measures APRA announced in March 2020. This temporary treatment ended on 31 March 2021.

APRA said it will release an updated prudential standard in July 2021 formalising this new treatment, in line with the approach taken in 2020.