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THE BANGKO SENTRAL ng Pilipinas (BSP) has approved relief measures to help give both banks and borrowers financial flexibility and support continued lending activity in the face of rising costs due to the impact of the Middle East war.

Financial institutions are allowed to grant affected borrowers temporary grace periods of up to six months for loan payments, according to the relief measures approved under Monetary Board Resolution No. 296 dated April 8. They can also defer agricultural loan payments for up to a year, the BSP said.

Loans to affected borrowers may also be temporarily excluded from banks’ past due and nonperforming loan classifications for up to one year.

This comes as Executive Order No. 110 dated March 24 placed the Philippines under a state of national energy emergency for a year due to the Middle East conflict’s impact on fuel supply. Financial institution’s can avail of the relief measures during the duration of the national emergency.

“The crisis resulted in, among others, rising oil prices and disruptions in energy supply. In this context, the Bangko Sentral ng Pilipinas is extending appropriate regulatory relief to support banks and their clients in sustaining economic activity during the period of the energy emergency,” BSP Governor Eli M. Remolona, Jr. said in a memorandum.

“BSFIs (BSP-supervised financial institutions) are expected to exercise prudent judgment in determining the appropriateness of the regulatory relief measures that will be availed. This includes ensuring that applicable relief is extended only where there is evidence of financial pressure or deterioration in the borrower’s repayment capacity attributable to the energy emergency, based on a reasonable and adequately supported assessment,” Mr. Remolona said.

“BSFIs are also expected to ensure that the application of regulatory relief shall remain targeted, proportionate, and consistent with safe and sound banking practices.”

Meanwhile, the BSP also wants banks to do “standardized restructuring” for low-income borrowers, Mr. Remolona told BusinessWorld on the sidelines of the International Monetary Fund-World Bank Spring Meetings in Washington, D.C.

“For those who cannot pay, there shouldn’t be lengthy negotiations with the borrowers. There’s going to be one kind of restructuring. We’re also asking banks to continue to lend to the low-income borrowers,” the BSP chief said.

BSP Deputy Governor Zeno Ronald R. Abenoja said in the same interview that they will implement measures regarding banks’ government securities holdings amid the market volatility caused by the war.

Meanwhile, the central bank is also urging financial institutions to help consumers and businesses by temporarily suspending fees and charges on online banking platforms or e-money services, including InstaPay and PESONet transfers.

“Lower-cost digital transactions may help consumers and businesses by reducing the need for transportation to banks and e-money service providers,” the BSP said. — Bettina V. Roc with a report from Katherine K. Chan

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