THE CENTRAL BANK will grant affected lenders regulatory relief. — BW FILE PHOTO

THE CENTRAL BANK will grant regulatory relief to banks and quasi-banks (QBs) to help them cope with the adverse effects of the African Swine Flu (ASF) and the coronavirus disease 2019 (COVID-19) on several sectors.

In a statement on Tuesday, the Bangko Sentral ng Pilipinas (BSP) said it has made available the granting of regulatory relief to lenders “that have sustained losses due to exposures to borrowers, industries and sectors severely affected” by ASF and COVID-19.

“This is in recognition of the potentially crippling impact of these events on key industries. We believe that the grant of regulatory and rediscounting relief measures is also applicable to financial institutions whose clients have suffered from adverse effects of these crises,” BSP Governor Benjamin E. Diokno said.

Temporary relief measures that may be granted include the staggered booking of allowance for credit losses, non-imposition of penalties on legal reserve deficiencies, and non-recognition of certain defaulted accounts as past due.

Banks that will avail the relief measures will be evaluated by the BSP on a case-by-case basis.

The BSP institutionalized the grant of regulatory relief to banks and QBs affected by calamities under Circular No. 1071 issued in October 2018.

“While the circular is aimed at providing a framework to systematically grant relief to banks affected by calamities and to support their recovery efforts, its coverage may be extended to the ASF and COVID-19 events even without a declaration of a state of calamity in specific areas of the country,” the central bank said.

Rizal Commercial Banking Corp. Chief Economist Michael L. Ricafort said these relief measures will give a “lifeline” not only to banks but to borrowers as well.

“The regulatory relief measures would also effectively extend a financial lifeline to some adversely affected borrowers to make important adjustments, on the hope that these may lead to some recovery to the business challenges being faced surprise nature of the novel coronavirus and the ASF,” Mr. Ricafort said in an e-mail.

Agriculture Secretary William D. Dar said earlier this month that total losses due to the ASF outbreak may already have hit P7 billion based on a previous estimate of a monthly opportunity loss of P1 billion since July last year, paired with the P1 billion allotted for the indemnification fund of hog raisers.

Meanwhile, Mr. Diokno said the central bank may cut rates by another 25 basis points as early as the second quarter to help shield the country from the economic fallout from the spread of COVID-19.

Mr. Diokno earlier said gross domestic product (GDP) growth could be dented by an average of 0.3% in the first two quarters if the virus outbreak will last until June.

Meanwhile, the National Economic and Development Authority has said the virus could hurt economic growth by 0.3% if the outbreak stays longer or until June, which could rise to 0.7% of GDP if the virus lingers until December, largely due to impact on the tourism sector.

So far, only one fatality and three infections have been recorded in the country. — LWTN