State-run Philippine Deposit Insurance Corp. (PDIC) has indefinitely extended and simplified its loan incentive program for borrowers of closed banks, aiming to provide faster and more accessible financial relief while improving loan recovery efforts.

In a statement on Monday, Feb. 16, PDIC said the enhanced Closed Bank Loan Incentive Program (CLIP) 4.0 took effect on Jan. 1, 2026, introducing streamlined rules and expanded coverage to encourage more borrowers to settle outstanding obligations.

First launched in 2021, CLIP was designed to help borrowers resolve unpaid loans with closed banks, preserve their credit standing, and avoid foreclosure of mortgaged assets. The latest version removes previous limitations tied to the date of a bank’s closure and applies incentives based solely on loan type and status.

Under CLIP 4.0, borrowers with total outstanding principal balances of up to ₱10 million may qualify for various incentives if they settle their obligations through a one-time cash payment.

One of the key changes involves loans secured by real estate mortgages (REM). The interest rate on unbooked interest has been standardized at three percent per year, replacing earlier variable rates ranging from three to five percent, which depended on factors such as the bank’s closure date and the loan’s age and status.

PDIC said the revision offers borrowers more predictable and affordable settlement terms.

The program also retains a 50-percent discount on outstanding principal and booked interest, penalties, and other charges for borrowers with clean loans or those secured by chattel mortgage or pledge.

In addition, all borrowers will continue to benefit from full waivers on unbooked penalties and other applicable charges, regardless of loan type.

PDIC said the indefinite extension and simplification of the program aim to expand its reach and encourage more borrowers to take advantage of the incentives.

“By simplifying the rules and further enhancing the incentives and indefinitely extending the program, PDIC reinforces its commitment to providing meaningful financial relief, enabling borrowers of closed banks to resolve their obligations more efficiently and move forward with renewed financial stability,” it said.

As the statutory receiver of closed banks, PDIC is responsible for collecting loan payments to augment funds used to settle creditors’ claims. It said sustaining the incentive program will help accelerate loan collections and improve recovery rates for creditors.

Established in 1963, PDIC protects depositors and helps maintain stability in the financial system. It operates as an attached agency of the Bangko Sentral ng Pilipinas (BSP) and is part of key financial sector coordination bodies, including the Financial Stability Coordination Council (FSCC).