SME Development Finance Corporation Limited (SDFC) has extended the repayment duration for loans issued during the COVID-19 pandemic to a total of 10 years from the loan’s start date. This announcement came after President Dr Mohamed Muizzu declared the abolition of interest on such loans during a campaign rally in Fonadhoo Island of Laamu Atoll.

According to SDFC, all adjustments, including the transition to a zero-interest loan, will be accessible through their online customer portal once governmental operations resume following the Eid al-Fitr holidays.

The corporation stated that any interest payments made by borrowers so far will be credited against the original loan amount. Should the total interest paid surpass the principal, the excess will be refunded.

President Muizzu, who revealed this policy during his campaign for the forthcoming parliamentary elections, expressed that the step was taken to alleviate the financial burden on the public affected by the pandemic. He noted the particular hardship loan interest repayments imposed during the crisis.

Borrowers interested in applying for the interest waiver are advised to do so when the government reopens after the holidays.

While President Muizzu has committed to waiving the interest on certain loans, it is noteworthy that this was a promise first made by his predecessor, former President Ibrahim Mohamed Solih, in the lead-up to the 2023 presidential election runoff. 

Despite his electoral defeat to President Muizzu, President Solih had followed thorough on his pledge, according to government records. Documentation from the President’s Office and the Finance Ministry reveals that on 15 November 2023, President Solih had requested the Finance Ministry to write off MVR 22.8 million in interest accrued on Covid-19 Relief Loans.

Furthermore, President Solih proposed that the MVR 23.7 million paid by borrowers as interest up to that date be credited towards the principal loan amount. He also directed the Finance Ministry to refund the excess MVR 1.07 million paid as surplus and to extend the repayment period for the Covid loans to a duration of 10 years.

Additional reporting by Mohamed A. Haleem