No payment grace period for week-long ECQ – BSP

Published March 29, 2021, 5:12 PM

by Lee C. Chipongian

The Bangko Sentral ng Pilipinas (BSP) issued a clarification Monday that there will be no grace period for loan payments during the seven-day enhanced community quarantine (ECQ) status while on Holy Week break.

 The BSP told banks who made the inquiry that the 30-day grace period under the Bayanihan law has lapsed and will no longer be applied after June 1, 2020.

 The Inter-Agency Task Force (IATF) also has no authority to extend grace periods nor did they indicate that there will be an extension of any grace period while on ECQ. The IATF’s Omnibus Guidelines with amendments as of March 28 for the management of emerging infectious diseases “does not operate to extend the 30-day grace period provided for under RA No. 11469,” the BSP clarified.

 In the meantime, the BSP reminded banks and non-banks to be more considerate and compassionate about their customers’ difficulties in meeting payment obligations with the return to stricter lockdown measures.

 “The BSP strongly encourages BSFIs (BSP supervised financial institutions) to continue to provide relief measures to its clients by renewing, restructuring, or extending the terms of the loans, among others, based on their continuing assessment of their cash flows,” it said in a statement.

 The BSP has provided BSFIs with “prudential” and time-bound relief measures with the expectation that banks and non-banks will pass on the reprieves, not only to provide financial services but to support households and business amid the pandemic, now on its second year. 

 “The BSP will continue to closely monitor the impact of the pandemic on the financial industry to promptly address any emerging risk and to support a sustainable economic recovery,” said the BSP.

 The BSP explained that payment of loans under Section 8.2 General Provisions of the Omnibus Guidelines on the Implementation of Community Quarantine in the Philippines, and as it refers to the mandatory grace period under Republic Act No. 11469 or the “Bayanihan to Heal as One Act”, had been implemented by BSFIs in 2020.

 Earlier this month, as a commentary on the proposed Bayanihan 3, BSP Governor Benjamin E. Diokno has said that the banking system may find it harder to absorb another round of grace periods or debt payments because BSFIs need time to build up buffers while the economy is gradually reopened. “As the economy is starting to recover from the initial impact of the COVID-19, a blanket implementation of a mandatory grace period may need to be carefully evaluated,” said Diokno.

So far, the two versions of the proposed Bayanihan 3 both in the Lower House and Senate has made no mention of any extension of a no-penalty or grace period for unpaid loans for all borrowers — households and corporate. It also did not discuss instituted moratoriums in paying loans, rents and utilities. 

The BSP said it will continue to have essential services while on a weeklong ECQ, or from March 29 until April 4. However BSP services will not be available on Maundy Thursday and Good Friday.

“The BSP continues to deliver its mandated responsibilities to support the smooth functioning of the economy and the financial system while safeguarding the welfare of its personnel and frontliners,” it said.

During the ECQ, the BSP will have alternative work arrangements at its headquarters in Manila and at its Security Plant Complex in Quezon City. Critical departments and support units will continue to report on-site, as appropriate, under shortened work hours, from 9am to 3pm, it added.

“The BSP is also coordinating with the banking industry on the continuous delivery of banking services. The BSP urges all banking personnel, especially frontliners, to carry out necessary protocols against COVID-19,” said the central bank. “The BSP and the banking industry stand ready to ensure the safe and smooth functioning of the banking system.”