The central bank on Thursday (May 21) reminded lending institutions that they were prohibited from charging interest on interest, fees and charges — such as late payment fees — on all loan payments falling due within the ongoing quarantine period.
At an online press briefing, Bangko Sentral ng Pilipinas Governor Benjamin Diokno stressed this point in response to consumers’ complaints about banks’ policies on charging interest on loans during the mandatory grace periods provided in the Bayanihan To Heal As One Act.
“We expect financial institutions to provide and communicate the least burdensome payment options to their clients,” he said. “They must consider this as their patriotic duty to help the public, especially the MSMEs, during this challenging time.”
Under current regulations, this relief shall cover all loans extended by all BSP-supervised financial institutions irrespective of place of operation.
These loans include salary, personal, housing and motor vehicle loans, credit card payments, as well as loans covered by post-dated checks, auto-debit or auto-deduct arrangements with lending financial institutions.
With the implementation of the relaxed quarantine scheme in certain regions, lending institutions are enjoined to implement a 30-day grace period for all loan payments with principal and interest falling due within this period.
An additional 30-day grace period for loan accounts that qualified for an initial 30-day grace period with new due date falling within the modified quarantine without incurring interest on interest, penalties, fees and other charges is also necessary.
Citing the implementing rules and regulations of the law, the BSP also said that interest accrued during the mandatory grace period under the lockdown will still be collected. This interest, however, may be paid in lump sum on the new due date or on a staggered basis over the remaining term of the loan.
The BSP also advised financial institutions and their clients to coordinate with each other, while financial consumers may also seek assistance through the BSP Consumer Assistance Mechanism.
“It is important to note that the application of the mandatory grace period shall cease once the ECQ and MECQ are lifted in the entire country,” the central bank said in a statement.