Bank of Israel to provide non-bank credit offers to COVID-hit small firms

Repo transactions with supervised non-bank credit providers would be available to small businesses badly hit by the coronavirus crisis to boost credit supply, the Bank of Israel announced on Sunday.

The non-credit bank offer would be introduced in the first week of January, according to the bank. The new monetary scheme aims to increase credit supply to the target business entities on top of what the banks provided.

The interest rate will be set at 0.1% percent and subject to the provision of credit to small and micro businesses at interest of up to prime plus 1.3% percent and fixed at a rate of -0.1%.

The Bank of Israel or the Finance Ministry’s capital markets division will supervise these non-bank credit providers which include credit card firms and institutions.

Small businesses were given very low interest rate loans and deferring loan repayment throughout the pandemic crisis as a way of the central bank’s aid to them.