The Bangko Sentral ng Pilipinas (BSP) has proposed formally adopting and expanding regulatory relief measures for banks affected by disasters, which would include a six-month grace period for loan repayments and the temporary exclusion of these loans from bad loan classifications.
According to a draft Circular issued by the BSP on Monday, June 2, the central bank has proposed to amend the regulatory relief policy for banks “by providing additional regulatory measures that will enhance their capacity to bounce back and continue providing timely financial services to their clients.”
This comes with the central bank’s objective of “strengthening banks’ operational resilience through business continuity or disaster recovery measures.”
It was at the beginning of the year that the relief measures were introduced for banks impacted by a series of destructive typhoons, such as Tropical Storm “Kristine” and Super Typhoons “Leon,” “Ofel,” and “Pepito.”
The central bank is now considering these measures for formal adoption, it said in the draft’s explanatory note.
Notable provisions include the temporary grace period for loan payments. Banks in disaster-stricken areas may give borrowers up to six months of payment relief, starting from the date the calamity began.
As such, soured loans during this period would be temporarily excluded from computations of past-due and non-performing loans (NPLs).
“Loans extended to affected borrowers may be temporarily excluded from past due and NPL computations for one year from the inception date of the calamity,” the BSP said in the draft.
Based on the proposed changes, banks can now access regulatory relief measures within one year from the start of a calamity, “which may be earlier than the date of official declaration of a state of calamity.”
Also, the deadline for submitting BSP-approved loan requests for officers affected by calamities has been extended from 30 to 90 days.
Several relief measures introduced during the pandemic are also proposed to be part of the regulatory relief policy, including relaxed ID requirements for households and micro-businesses in affected areas for a period of three months.
Banks can also notify the BSP of changes in banking hours or temporary branch closures through email or SMS, defer branch openings for up to three years, and spread impairment loss recognition over three years with BSP approvals.
Additionally, the BSP is proposing standardized loan relief for borrowers in the agriculture sector, allowing for payment postponement and adjusted repayment terms based on crop cycles due to climate-related risks.
Banks have until June 18 to submit their feedback. If finalized, the policy is expected to take effect 15 days after publication in the Official Gazette or a newspaper of general circulation.