Bayanihan 2 provision: BSP issues memo giving 2-month reprieve on loan payments

By: - Reporter / @daxinq
/ 07:20 PM September 18, 2020

MANILA, Philippines—Borrowers may now avail themselves of a two-month reprieve from paying their loans from banks and other financial institutions that fall under the regulatory powers of the central bank.

In a mobile phone message to reporters, Bangko Sentral ng Pilipinas (BSP) Governor Benjamin Diokno said he signed on Friday (Sept. 18) the memorandum that puts into effect the provision of the Bayanihan Heal As One Act that mandated a 60-day moratorium on all loan payments.


According to the central bank chief, the law “requires all covered institutions to implement a mandatory, one-time, 60-day grace period to all loans that are existing, current and outstanding, falling due, or any part thereof, on or before December 31, 2020.”

This grace period shall apply to each loan of individuals and entities with multiple loans, according to the memo.


BSP-supervised financial institutions shall not charge or apply interest on interest, penalties, fees, or other charges during the mandatory grace period for future payments or amortization of borrowers, Diokno said. These institutions include universal and commercial banks, thrift banks, rural banks, cooperative banks, savings and loan associations and pawnshops, among others.

These financial institutions are likewise prohibited from requiring their clients to waive the application of the provisions of the Bayanihan Heal As One Act, which was passed recently by Congress and enacted by President Rodrigo Duterte to provide multiple stimulus packages to various sectors of the economy reeling from the COVID-19 pandemic.

“No waiver previously executed by borrowers covering payments falling due until Dec. 31, 2020 shall be valid,” Diokno said.

Accrued interest for this one-time grace period may be paid by the borrower on a staggered basis until the end of this year.

“Nonetheless, this shall not preclude the borrower from paying the accrued interest in full on the new due date,” the BSP chief explained.

Additionally, the lending financial institutions and the borrowers may agree to a grace period longer than the mandated 60-day period, or the staggered payment of accrued interest beyond the end of the year, he said.

The 60-day grace period was agreed upon by lawmakers amid vigorous debates on the length of the moratorium.


The House of Representatives had initially wanted a one-year moratorium on loan payments, but this was opposed by banks and government regulators, citing the potential risks to the banking system and the Philippine economy of a prolonged delay in loan payments.

The Senate, meanwhile, wanted a 45-day moratorium, with the 60-day compromise being reached during the bicameral conference committee meetings.

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