The U.S. Federal Reserve is relaxing its oversight of the banking industry in response to the coronavirus crisis, suspending examinations of smaller banks until at least the end of next month.

The Fed said it was reducing its focus on examinations and inspections to “minimize disruption and burden on financial institutions” as it focuses on monitoring the banking system “during this period of uncertainty.”

For supervised institutions with less than $100 billion in total consolidated assets, the central bank generally intends to cease all regular examination activity except where the work is “critical to safety and soundness or consumer protection, or is required to address an urgent or immediate need.” The Fed will reassess in the last week of April to determine whether conditions have changed.

As for large banks with assets greater than $100 billion, the Fed will defer a significant portion of planned examination activity based on its assessment of the burden on the institution and the importance of the exam to the supervisory understanding of the firm, consumer protection, or financial stability.

“The Federal Reserve understands that this unique and evolving situation could pose temporary business disruptions and challenges that affect banks, businesses, consumers, and the economy,” it said in a statement.

The new supervisory approach is “intended to help financial institutions to deploy their resources as efficiently as possible and continue to support their customers and local economies in a prudent and fair manner while meeting current challenges,” the Fed added.

As The Associated Press reports, the Fed and other banking regulators have been seeking to “lighten regulatory oversight during the viral outbreak.” On Sunday, they issued guidance encouraging banks to make loan modifications for borrowers affected by the coronavirus.

The regulatory agencies said they “encourage financial institutions to work with borrowers, will not criticize institutions for doing so in a safe and sound manner, and will not direct supervised institutions to automatically categorize loan modifications as troubled debt restructurings.”

Large banks are currently preparing to submit their annual “stress test” plans to the Fed, which has set an April 6 deadline. “The plans will be used to monitor how firms are managing their capital in the current environment, planning for contingencies, and positioning themselves to continue lending to creditworthy households and businesses,” the Fed said.

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