Previously capping loan terms at five years at most, the Bangko Sentral ng Pilipinas (BSP) has moved to amend this rule, proposing a principles-based approach where loan length will be based on a comprehensive assessment of a borrower’s creditworthiness.

Under a draft circular, which is soliciting industry feedback until April 20, the BSP is seeking to tweak existing rules governing salary-based general-purpose consumption loans in a bid to “provide greater repayment flexibility to borrowers and salaried employees, including teachers.”

This proposal, once implemented, is expected to ease the burden on borrowers when it comes to repaying their loans.

“Consistent with this objective, the revised regulations move away from a prescriptive prudential limit on loan tenor toward a principles‑based approach,” the BSP wrote.

Under the revised framework, lenders under the supervision of the BSP carry the responsibility of “[determining] the appropriate loan tenor and other loan terms based on a thorough assessment of the borrower’s creditworthiness.”

Among the relevant factors that will be considered during assessments are the borrower’s “ability to pay, sources of repayment, and repayment history, as well as the nature and purpose of the loan, consistent with sound credit risk management practices.”

This shift would allow the final repayment period to be established through mutual agreement between the lender and the borrower, provided it remains subject to prudent credit risk controls.

These regulations define salary-based general-purpose loans as unsecured credit for specific consumption needs such as education, emergencies, or household expenses.

Additionally, the BSP provided clarifications as to the scope of salary‑based general‑purpose consumption loans “by distinguishing them from other personal loan products, even where repayment is facilitated through salary deduction or similar arrangements.”

Based on the draft, covered loan transactions may include “credit accommodations for education, hospitalization, emergency, travel, household, and other personal consumption needs.”

Meanwhile, the proposed rule excludes loan products such as credit card loans, auto loans, housing loans, as well as loans used for business or income-generating activities, as these products are already governed by other existing rules specific to such products.

Lending by big banks, or universal and commercial banks (UK/Bs), grew 9.3 percent in January—its slowest pace in nearly two years, since the 8.6 percent recorded in February 2024. Major drags were a deeper contraction in foreign loans and modest growth in domestic lending.

Consumer loans to residents—which cover general-purpose salary, credit card, and motor vehicle loans—expanded at a slower rate of 21.3 percent last January, down from 21.5 percent in December 2025.