By LEE C. CHIPONGIAN
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said regulatory relief will be granted to financial institutions – both banks and quasi-banks – that were “severely” affected by the African Swine Flu (ASF) and the Coronavirus Disease 2019 (COVID-19).
These regulatory relief measures which are temporary includes grace periods for rediscounting loans, staggered booking of allowance for credit losses, non-imposition of penalties on legal reserve deficiencies, and non-recognition of certain defaulted accounts as past due.
Banks and quasi-banks that will apply for reprieve and have “sustained losses due to exposures to borrowers, industries and sectors severely affected by ASF and COVID-19” will be evaluated on a case-to-case basis, a statement from the BSP said Tuesday.
Diokno said extending the relief measures will cushion the “potentially crippling impact of these events on key industries.”
“We believe that the grant of regulatory and rediscounting relief measures is also applicable to financial institutions whose clients have suffered from adverse effects of these crises,” he said.
The BSP provides regulatory relief to BSP-supervised financial institutions affected by natural calamities based on Circular No. 1071 (“Adoption of Policy Framework on the Grant of Regulatory Relief to Banks/Quasi-Banks Affected by Calamities dated, approved October 2018) to assist in their recovery and allow them to resume normal operations.
“While the circular is aimed at providing a framework to systematically grant relief to banks affected by calamities and to support their recovery efforts, its coverage may be extended to the ASF and COVID-19 events even without a declaration of a state of calamity in specific areas of the country,” the BSP said.
Diokno said this month that the COVID-19 outbreak poses a downside risk to the country’s economic growth this year. “The BSP’s initial assessment points to a potential dampening impact on the Philippine economy in the near term mainly through disruptions to tourism and associated services,” he said.
Diokno also expects continued uncertainty as the viral outbreak will have an impact on investment and consumption which could lead to disinflationary risks. The February 6 monetary policy decision to cut key rate by 25 basis points was a preemptive move to boost market confidence in the way of the COVID-19 and also the ASF.
There have been three cases of infection in the Philippines, one death and two under treatment, and all were Chinese nationals from Wuhan, ground zero for the viral scare. Globally, the number of infected persons have reached 77,794, with 2,348 deaths. About 76,392 of confirmed infected persons are in China.
The ASF, a deadly animal disease affecting pigs and wild boars, since 2019 has been an upside risk to inflation. So far, ASF has been detected in 15 key areas in the Philippines including Metro Manila, specifically, Quezon City, Malabon and Caloocan.