Senator Grace Poe reiterated the need to pass the proposed Financial Institutions Strategic Transfer (FIST) law to help banks respond to the long-term impacts of the COVID-19 pandemic.
“Banks play a critical role as they could throw a lifeline to businesses and their workers amid the pandemic. Providing the local banking system with the support it needs will insulate it from a buildup of bad loans, which could impose costs on the poor,” Poe said in a statement after President Duterte certified Senate Bill 1849 as urgent.
“We want to be better prepared for the economic impact of COVID-19 that has no end yet in sight,” she added.
The FIST bill seeks to allow banks and financial institutions to dispose of their non-performing assets (NPAs) or loans (NPL). Poe sponsored the bill for plenary approval last Sept. 28.
The Senate has just suspended sessions and is set to resume on Nov. 9.
During the Senate committee hearing on the bill late August, an official of the Bangko Sentral ng Pilipinas (BSP) said that while current level of bad debts remain manageable and banks have “sufficient” buffers to address the effects of the pandemic, the failure to prepare for the expected increase of NPAs could “adversely affect” the confidence of investors and cause the rise in unemployment and economic slowdown.
NPAs could reach up to P635 billion by the end of 2020, said the BSP.
Government economic managers have been pushing for the passage of the FIST as a legislative response to the COVID-19 outbreak’s impacts.