President Duterte has signed into law the Financial Institutions Strategic Transfer (FIST) Act that aims to allow banks and other financial institutions to offload soured loans amid the coronavirus disease (COVID-19) pandemic, Malacañang announced.
(MANILA BULLETIN FILE PHOTO)
In an announcement over State-run PTV-4, Presidential spokesman Harry Roque said the signing of Republic Act (RA) No. 11523 was timely because it will help financial institutions while dealing with the effects of the global health crisis.
"Napapanahon na po ang pagpasa ng FIST Law lalo na sa ngayon na tayo ay nasa panahon ng pandemiya (The singing of the FIST Law is timely especially now that we are facing a pandemic)," he said Wednesday, Feb. 17
"Nagapapasalamat po kami sa Kongreso sa pagsasabatas ng RA 11523 na sinertify as urgent ng ating Presidente (We thank Congress for RA 11523 that was certified as urgent by our President)," he said Wednesday, Feb. 17.
President Duterte certified the bill as urgent in October last year.
Roque said the signing of the law is proof that the government is focused on reviving the economy while grappling with the pandemic.
"Nananatili ang ating layunin ng pagbangon ng ekonomiya sa pamamagitan ng pagpapatupad ng (Our goal is still to revive the economy by implementing) fiscal and economic reforms," he said.
"Kasama ng rollout ng ating mass vaccination program, ay sabay-sabay tayong gagaling at aahon mula sa COVID-19 (As we roll out our mass vaccination program, we will rise as one from the effects of COVID-19)," he added.
The new law recognizes the role of banks and other financial institutions as mobilizers of savings and investments and in providing the needed financial system liquidity to keep the economy afloat.
It will cover banks and other lending companies licensed by the Bangko Sentral ng Pilipinas (BSP).
Roque said the new law will help financial institutions maintain their financial health, including:
- Addressing nonperforming asset problems of the financial sector
- Attracting private sector investment on nonperforming assets
- Removing the barriers to the acquisition of nonperforming assets
- Helping in the rehabilitation of distressed businesses
- Improving the liquidity of the financial system
The Financial Executives Institute of the Philippines (FINEX) lauded the signing of the new law.
“The new law is a forward looking legislation that is envisioned to maintain the health of the financial sector which may be adversely impacted by the inability of certain businesses to pay their loan obligations due to the pandemic,” FINEX said in a statement.
It stressed that “a healthy financial sector is indispensable to ensure liquidity that can be harnessed to help our economy recover faster from the pandemic.”
“The new law eliminates barriers that prevented its predecessor law from fully achieving its objectives. Hopefully, it will encourage the banking sector to continue lending to the private sector and thereby achieve its objective to rehabilitate distressed business and make them meaningful contributors to our economic recovery,” FINEX added.
Senator Grace Poe, the sponsor of the said bill, said in September last year that the measure may free up P1.19 trillion worth of loans from the sale of nonperforming assets to FIST corporations.
"When we get to the bottom of it, this law’s primary objective is really to keep the banking sector above water during this crisis," she had said.
"Before the banks can help MSMEs (micro, small, and medium enterprises), we must help the banks first," she added.
According to Poe, the said measure may also help around 600,000 MSMEs and save more than 3.5 million jobs.