The Bangko Sentral ng Pilipinas (BSP) is moving to scrap the five-year cap on salary loan maturities, a policy shift aimed at easing the debt-servicing burden on public and private sector employees as local credit growth touches multi-year lows.

The BSP said in a statement last Friday, Feb. 27, that the central bank is reviewing amendments to regulations governing salary-based general-purpose consumption loans (SBGPCLs), specifically targeting the lifting of the existing tenor limit.

These amendments follow the initial review of lending rules, including personal loans extended to teachers, who represent a big portion of the country's consumer credit market.

By removing the hard cap, the BSP intends to allow lenders to offer longer repayment schedules to reduce monthly installments by better aligning borrowers' debt obligations with their actual cash flow.

Currently, salary loan terms are generally restricted to three years and may only be extended to five years under specific circumstances.

However, even with these planned amendments, the BSP said domestic lenders must still uphold strict credit standards to ensure that borrowers have the stable income and track record required to repay the debt.

“Loans will remain subject to prudent credit standards such as the borrower’s ability to pay, stability of income, and payment track record,” the BSP said.

Rizal Commercial Banking Corp. chief economist Michael Ricafort said loosening the tenor limit “would give greater flexibility for consumers to prevent bunching up loan payments and also spread over longer tenors, other than housing loans and auto loans, based on their credit cores.”


To recall, lending by big banks, or universal and commercial banks (U/KBs), fell to a nearly two-year low in December 2025, dragged down by a deeper contraction in loans to foreign borrowers and slower growth in lending to resident clients.

Data from the BSP showed bank lending slowed to 9.2 percent growth in December 2025, the slowest expansion in nearly two years, down from 8.6 percent in February 2024.

Consumer loans—credit card, motor vehicle, and general-purpose salary loans—to residents expanded more slowly at 21.4 percent, marking the weakest growth for the segment in nearly three years since February 2023’s 21.3 percent expansion.