By Melissa Luz T. Lopez, Senior Reporter
THE BANGKO SENTRAL ng Pilipinas (BSP) has approved new rules which prescribe a standard process for providing relief to bank branches operating in disaster-stricken areas.
BSP Circular 1017 outlines a “uniform and systematic approach” before the central bank can announce regulatory relief for banks and quasi-banks (QBs) operating in towns or provinces which have been ruined by calamities.
The central bank extends relief measures for banks and quasi-banks following natural calamities and disaster events which disrupt their day-to-day operations.
The fresh rules specifically require that an area needs to be placed under a state of calamity before the BSP can extend relief to bank branches operating there. This may come from a declaration issued by local government units or by the President, as recommended by the National Disaster Risk Reduction and Management Council.
A state of calamity involves mass casualty as well as “major” damage to property, livelihood, roads and to the “normal way of life” of the community due to a natural or human-induced hazard, according to the BSP issuance signed Oct. 10.
Under the relief package, the BSP will allow branches located in the affected areas to extend financial aid to its officers and employees even beyond the set of fringe benefits approved by the regulator for each firm.
To add, thrift, rural, and cooperative banks are allowed to exclude outstanding loans from borrowers in the covered areas in computing their past due ratios, provided that such borrowings are restructured or given relief. The central bank would also not impose penalties even if reserves fall below requirement, while those under rehabilitation may take a pause in settling their monthly dues with the BSP.
No fines will also be imposed for delayed submissions of regulatory reports to the central bank. Lenders which have outstanding rediscount loans with the BSP can also extend the payment period up to five years.
Such arrangements valid for one year following the declaration of state of calamity in the area. Banks must write to the BSP within that period to inform that they will be availing these relief measures.
By providing temporary relief, the central bank effectively relaxes capital and liquidity requirements imposed in order to ease the burden on financial firms and allow them to recover from disrupted services.
“The damages brought about by calamities to people’s resources and livelihood may affect the paying capacity and risk profile of the borrowers/clients of banks/QBs. This may translate to higher past due ratios and inability to meet the legal reserve requirements,” the circular read, as signed by BSP officer-in-charge Deputy Governor Maria Almasara Cyd N. Tuaño-Amador.
The central bank announced in August that relief measures have been made available to banks based in specific towns in Ilocos, the Cordillera Administrative Region, Cagayan Valley, Central Luzon, Calabarzon, Mimaropa and Western Visayas; as well as in Malabon, Marikina, Parañaque, Pasig, Quezon City and Valenzuela which were affected by tropical depression Josie in July.
The new rules may apply to affected banks located in Cagayan Valley, Isabela, Central Luzon, and the Cordillera Administrative Region, which Pres. Rodrigo R. Duterte placed under state of calamity following the wrath of typhoon Ompong (international name: Mangkhut) last month.
The BSP also announced similar measures for lenders based in war-torn Marawi City last January.