Banks began offering customers affected by the coronavirus pandemic loan deferrals in March and are now contacting affected customers to encourage them to restart repayments or restructuring loans. The RBA has warned the lenders to tread lightly.
"Appropriate culture will be especially important as banks face the challenging task of dealing with customers’ loan repayment deferrals and responding more broadly to the economic contraction,"the report said.
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It also warned the Australian Prudential Regulation Authority would soon restart work on ensuring executive pay was tied to targets that encourage good practice and culture.
The RBA's comments came within a larger report into the impact of the coronavirus pandemic on the financial system,with significant risks and volatility buffered by the banks'high capital levels.
The Commonwealth Bank's senior economist Kristina Clifton said the report was a"sobering read".
"The next few months will be telling in how households manage the resumption of mortgage repayments. The risk is that some may need to sell their property to repay their debt. This may have flow-on effects to dwelling prices,"she said.