THE government ordered all lenders to give a 30-day grace period for all loan payments that are falling due within the enhanced community quarantine (ECQ) period.

The Department of Finance (DoF) on Wednesday released the implementing rules and regulations (IRR) of Section 4(aa) of Republic Act (RA) No. 11469 or the “Bayanihan to Heal as One Act.”

While the lockdown only applies to Luzon, Finance Secretary Carlos G. Dominguez III told reporters that the 30-day mandatory grace period is applicable nationwide as “neither the law nor IRR limits the coverage to Luzon.”

Under the law, banks, quasi-banks, nonstock savings and loan associations, credit card issuers and pawnshops should implement a 30-day grace period for “all loans with principal and/or interest falling due within the ECQ period without incurring interest on interest, penalties, fees and other charges.”

The IRR expands this list to include other credit-granting financial institutions supervised by the central bank, Securities and Exchange Commission and Cooperative Development Authority, as well as state-run pension funds such as Government Service Insurance System, Social Security System and Pag-IBIG Fund.

The IRR defines the ECQ as the period from March 17 to April 12, 2020, as cited in Proclamation No.929 issued on March 16, 2020.

“The initial grace period shall automatically be extended if the ECQ period is extended by the President,” the rules stated.

Under the IRR, all loans with principal and/or interest falling due during the ECQ period are covered. These include loans that have been extended to individuals, households, micro, small and medium enterprises (MSMEs), corporate borrowers and other parties.

In case of multiple loans of individuals and entities, the grace period will apply to each loan.

All covered institutions shall not impose interest, fees and charges during the 30-day grace period on future payments and amortizations of these loans.

The covered institutions are barred from requiring clients to waive the application of the Bayanihan Act’s provisions during the ECQ period.

“No waiver previously executed by borrowers covering payments falling due during the ECQ period shall be valid. Nonetheless, the grant of grace period by the above-mentioned Covered Institutions shall not preclude the borrowers from paying their obligations as they fall due during the period of ECQ should they so desire,” it added.

Documentary tax stamp (DST) will also not be imposed on loans falling within the ECQ period as well as on “credit extensions and credit restructuring, micro-lending including those obtained from pawnshops and extensions thereof.”

For the accumulated interest on the loans, the IRR said borrowers can pay this on a staggered basis with the full payment to be settled on the new set date following the 30-day grace period. — B.M.Laforga

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