By Steven Scheer

JERUSALEM Israelis deferred payment on nearly 3 billion shekels of loans in October as a result of Israel's war with Hamas, the banking regulator said on Wednesday.

In all, some 117,000 loans were deferred, mostly in mortgages and other consumer credit, totalling 2.7 billion shekels ($727 million) last month, the Bank of Israel said.

Data gathered in November, it said, showed that one-third of those who deferred loan payments last month were customers who were directly impacted by damage from the war - those who live or own a business within 30 km from the Gaza border, people who were evacuated from their homes, people are were called up as reservists and those who are immediate relatives of those killed during the war, kidnapped or missing.

Following the attacks on Israel by Palestinian Hamas gunmen on Oct 7 and the subsequent war, the central bank's banking supervisor told banks to allow for loan deferrals and ease fees for households and businesses affected by the conflict.

"Since the publication of the deferral program, we have seen tremendous interest among customers, and that the measure significantly helps those who need it to get through this challenging time," Supervisor of Banks Daniel Hahiashvili said.

"It is important to emphasize to the public the significance of deferring loan repayments, and that borrowers should do so only if they really need to."

Bank of Israel Governor Amir Yaron has suggested that he is opposed to lowering short-term interest rates during the war but that steps such as those by banks were "in practice, some monetary easing," since they target those who need it most and without increasing the risk premium in financial markets.

($1 = 3.7154 shekels)

(Reporting by Steven Scheer; Editing by Angus MacSwan)