THE CENTRAL BANK will extend the effectivity of its regulatory relief measures until March 2021 and is also open to lengthening this depending on how the crisis plays out.

Memorandum No. M-2020-057 signed by Bangko Sentral ng Pilipinas (BSP) Deputy Governor Chuchi G. Fonacier on July 21 said the Monetary Board approved the amendments to the operational relief measures for BSP-supervised financial institutions laid out in Memoranda Nos. M-2020-011 dated March 19 and M-2020- 015 dated March 30.

“This shall be effective until March 31, 2021. The period of applicability may be extended depending on the developments of the COVID-19 (coronavirus disease 2019) situation,” the new memorandum said.

Among the relief measures that will be extended will be the higher single borrower’s limit (SBL) of 30% from 25%, which was only supposed to be effective for six months starting March.

The SBL limits banks’ credit exposure to reduce risks that may arise from a borrower’s default.

The BSP is also reducing the maximum penalty that may be imposed for reserve deficiencies to the overnight lending rate, currently at 2.75%, plus 10 basis points (bps) until March 2021. Previously, it was the overnight lending rate plus 50 bps.

This is on the condition that the “maximum reserve deficiency of the BSFI (BSP-supervised financial institution) shall be 200 basis points, and the excess above that shall be subject to regular penalties.”

The reserve requirement ratios of universal and commercial banks, thrift and rural lenders are at 12%, three percent and two percent, respectively.

The relaxation of notification requirements for temporary closure of bank branches and head offices and also changes in banking hours will also be extended until March 2021. Lenders are required to inform the public of such through their websites and social media accounts.

“The temporary closure of said unit beyond one year shall be deemed as a permanent closure and surrender of license of the bank branch/branch-lite unit or NSSLA (nonstock savings and loan association) service unit,” Ms. Fonacier said.

Reports or documents submitted via e-mail will also be deemed authorized without the need for a physical signature so long as these are in accordance with guidelines set by the BSP. — L.W.T. Noble