60-day moratorium to pay loans approved
MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) ordered all banks and financial institutions under its jurisdiction to implement a 60- day moratorium on loan payments as mandated by Republic Act No. 11494, or the Bayanihan to Recover as One Act (Bayanihan 2), which President Rodrigo Duterte signed into law on Sept. 11.
In a text message to reporters, Bangko Sentral ng Pilipinas Gov. Benjamin Diokno said he signed on Friday the memorandum that “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—which include universal and commercial banks, thrift banks, rural banks, cooperative banks, savings and loan associations, and pawnshops, among others—shall not charge or apply interest on interest, penalties, fees or other charges during the mandatory grace period to future payments or amortizations of the borrowers, Diokno said.
These financial institutions are likewise prohibited from requiring their clients to waive the application of the provisions of the Bayanihan 2 law, which aims to provide multiple stimulus packages to various sectors of the economy reeling from the coronavirus pandemic.
“No waiver previously executed by borrowers covering payments falling due until Dec. 31, 2020 shall be valid,” Diokno said.
Meanwhile, the accrued interest for this onetime 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 after 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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