THE MANDATORY debt moratorium will be applicable to multiple existing, current, and outstanding loans by individuals and entities to give relief to borrowers amid the coronavirus crisis.
Memorandum No. M-2020-074 signed by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno provides the implementing rules and regulations (IRR) for the loan moratorium which will be applied to credit disbursed by BSP-supervised financial institutions (BSFI) including banks, quasi-banks, nonstock savings and loan associations, credit card issuers, trust departments, pawnshops, and other credit-granting entities supervised by the central bank.
“For example, the due date of a loan with monthly amortization falling due on Sept. 19 shall be moved to Nov. 19,” it said.
“Following this example, if the last payment due date of the said loan before the application of the mandatory grace period is on Sept. 20, 2024, said last payment due date shall be moved to Nov. 19, 2024,” it added.
Restructured loans will also be covered as long as they are current and performing as of Sept. 15. Meanwhile, the BSP said past due loan accounts will not be covered by the relief measure.
The 60-day moratorium is provided under Republic Act No. 11494 or the Bayanihan to Recover as One Act signed earlier this month.
The law mandates banks to waive charges for penalties due to late payments as well as the additional interest on amortizations that fall within the period.
The BSP memorandum said the grace period is applicable to credit extended by lenders including salary, personal, housing, commercial, motor vehicle loans, amortizations, financial lease payments, premium payments, and credit card payments.
The IRR also requires BSFIs to coordinate with borrowers for loans paid through post-dated checks and auto-deduct arrangements. Lenders should secure clients’ consent before proceeding with such arrangements, it said.
For BSFIs that will allow further loan term extensions or restructuring beyond the mandatory grace period, the BSP will provide some regulatory relief measures.
These will include staggered booking of allowances for credit losses; exemption from loan-loss provisioning; exemption from the limits on real estate loans when applicable; exemption from related party transaction restrictions; and non-inclusion of its reporting on nonperforming loans (NPLs), according to the IRR.
The BSP expects banks’ NPL ratio to rise to 4.6% by end-December due to the impact of the pandemic on borrowers’ financial standing.
At end-July, gross NPLs jumped by 32.1% to P290.1 billion from P219.6 billion a year ago, equivalent to an NPL ratio to 2.67%, up from the 2.53% as of June and the highest in six years or since the 2.74% logged in August 2014. — L.W.T. Noble