The Bangko Sentral ng Pilipinas (BSP) on Thursday reminded lending institutions that they are 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.
In an online press briefing, BSP Gov. Benjamin Diokno said the reminder was in response to consumers’ complaints about the policies of some banks that have been charging interest on loans during the mandatory grace period provided under the Bayanihan to Heal as One Act.
“We expect financial institutions to provide and communicate the least burdensome payment options to their clients,” Diokno said. “They must consider this as their patriotic duty to help the public, especially the micro, small and medium enterprises 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, and credit card payments, as well as loans covered by postdated checks and autodebit or autodeduct arrangements with lending and other financial institutions.
30-day grace period
With the implementation of a more relaxed modified enhanced community quarantine (MECQ) or the general community quarantine schemes 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 without incurring interest on interest, penalties, fees and other charges is also necessary for loan accounts that qualified for an initial 30-day grace period with the new due date falling within the modified quarantine period.
Citing the implementing rules and regulations of the law, the BSP said that interest accrued during the mandatory grace period under the lockdown would still be collected.
Staggered basis
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 (enhanced community quarantine) and MECQ [schemes] are lifted in the entire country,” the BSP said in a statement.