Fresh from having a law that will help ease banks’ bad loan burdens enacted, the central bank wants Congress to pass four other measures aimed at helping the Philippine economy weather the ill effects of the coronavirus pandemic.
In particular, Bangko Sentral ng Pilipinas Governor Benjamin Diokno urged lawmakers to pass four key bills that would improve consumer protection, ease bank secrecy laws, boost lending to the agricultural sector and provide financial support to troubled companies.
“The Financial Consumer Protection Bill sets a clear legal mandate and a comprehensive financial consumer protection framework,” he told reporters in a briefing last week. “Financial inclusion, financial education, good governance and effective supervision all come into play in this measure.”
Meanwhile, the Bank Secrecy Bill will give authority to the monetary regulator to look into bank deposit information under specific circumstances. Its proponents hope it will allow the BSP to more effectively fulfill its mandate and have a more “holistic” bank examination.
The Agri-Agra Bill, for its part, will strengthen rural development by providing a comprehensive approach that considers the broader agricultural financing ecosystem and community requirements.
“It addresses the challenges faced by the agricultural sector in obtaining access to financing,” Diokno said.
Finally, the GUIDE—or Government Financial Institutions Unified Initiatives to Distressed Enterprises for Economic Recovery—bill seeks to boost the capacity of Land Bank of the Philippines and Development Bank of the Philippines to provide access to credit and financial assistance to distressed enterprises.
“These include micro, small, and medium enterprises and strategically important companies severely affected by the pandemic,” Diokno said, adding that the central bank was looking forward to further engaging both houses of Congress for the passage of these bills.
Last week, President Duterte enacted into law a measure that would allow financial institutions to unload their bad assets that have risen due to the pandemic-induced business slowdown—a framework that will afford greater protection for banks against external shocks.
Diokno said the Financial Institutions Strategic Transfer (FIST) Act would reduce the nonperforming loan (NPL) ratio of the banking system by between 0.63 and 7 percentage points.
“The FIST law will allow banks to easily dispose bad assets through asset management companies,” he said. “The new law will help keep the banking system stable despite the effects of the COVID-19 pandemic. It will ease the NPL ratios of banks moving forward.”
The law’s draft implementation rules was already being prepared by the Securities and Exchange Commission as the lead agency for the relief measure, taking into account inputs from the central bank. The draft rules are currently being circulated with industry stakeholders for their comments. INQ