Forbearance

Forbearance refers to the arrangements through which a lender adjusts the repayment terms of a customer in actual or emerging difficulty: deferred instalments, rescheduling, or a temporary reduction in monthly payments. The aim is to avoid default and over-indebtedness, in the interest of both the customer and the lender. European banking supervisors define the concept and require specific monitoring of the exposures concerned. Spotted early through continuous account monitoring, a difficulty can be handled before it turns into arrears.