BSP seeks clearer rules on seized loan collateral

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is proposing regulatory changes to make sure there are clear and consistent rules for banks on how to handle personal property taken from delinquent borrowers when enforcing loan collateral.

The central bank is seeking comments on a draft circular that would further align booking rules with the Personal Property Security Act (PPSA), which modernizes the use of personal assets as collateral to secure loans.

Feedback will be accepted until Oct. 8.

Under the proposal, banks could classify such property as “real and other property acquired,” or ROPA, once documents show they have taken control of the asset—with or without judicial process—through public or private disposition, retention of collateral under certain conditions, or recovery in special cases under PPSA.

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Current framework

At present, banks could recognize these assets as ROPA only after a court judgment in cases of judicial foreclosure, the sheriff’s certificate of sale in extrajudicial foreclosure, or the notarization of a deed of dacion in payment.

That said, the proposed framework is intended to clarify the process. For example, a bank that acquired a truck from a logistics company that had defaulted on its loan would be able to classify the vehicle as ROPA immediately upon taking legal control, rather than waiting for a court order or notarized deed.

“The proposed amendments seek to promote consistent regulatory treatment and establish clear guidelines for the timing and recognition of personal property acquired in the settlement of loans,” the BSP wrote in the draft document.

Latest data from the BSP showed that gross ROPA of the Philippine banking sector had amounted to P160.74 billion as of July, slightly up from P159.82 billion in June. /dda

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