The Kiwi subsidiaries of Australia's four big banks yesterday agreed to a loan repayment holiday for mortgage and business borrowers for the next six months.The NZ government will carry 80 per cent of the credit risk under a Guarantee Scheme.New Zealand's finance minister Grant Robertson announced the banks would suspend scheduled principle and interest repayments for borrowers whose incomes had been affected by the Covid-19 crisis.The banks have also agreed to implement a $NZ6.25 billion "Business Finance Guarantee Scheme" supported by the New Zealand Government that will provide loans of up to $NZ 500,000 to small and medium sized businesses.The government will wear most of the credit risk on the loans that are expected to be repaid after three years."The loans will be for a maximum of three years and are expected to be provided by the banks at competitive, transparent rates," Robertson said."The government will carry 80 per cent of the credit risk, with the other 20 per cent to be carried by the banks."Home borrowers who are stood down from their jobs because of the health crisis will also be eligible for loan holidays for up to six months.However, the banks and the RBNZ are still finalising details of the support arrangements, which are expected to be announced before the end of the week.It is not clear whether investment housing borrowers will be eligible for the relief."A six month mortgage holiday for people whose incomes have been affected by Covid-19 will mean people won't lose their homes as a result of the economic disruption caused by this virus," said Robertson.New Zealand's loan relief measures are roughly in line with those announced by the major banks for Australian borrowers last week.The measures are being implemented by the Reserve Bank of New Zealand, which has agreed to relax normal capital rules and core funding requirements to accommodate special relief to borrowers."Banks remain well capitalised and liquid," said RBNZ Governor Adrian Orr."Their ability to extend credit to firms to bridge the difficult times created by Covid-19 is critical and made more possible with today's announcements."The RBNZ and the government are also consulting on another banking support package aimed at corporate borrowers, but Robertson did not say when details of the measures would be announced.