The Monetary Board, in its meeting on 7 December 2006, approved the restructuring of outstanding rediscounting obligations as of 30 November 2006, of all operating banks that have branches or end-user borrowers located in the provinces of Aurora, Batangas, Quezon, Marinduque, Occidental Mindoro, Oriental Mindoro, Camarines Sur, Albay, Camarines Norte, Catanduanes, Masbate and Sorsogon who suffered considerable damage to properties, infrastructure and agriculture brought about by typhoon “Reming”.
BSP Governor Amando M. Tetangco, Jr. stressed that: “The financial relief is intended to assist not only banks but also end-user borrowers through the restructuring of outstanding rediscounting loans on more lenient terms and less documentary requirements.” To simplify the documentary requirements, no additional collateral will be required except for the restructured promissory note of the end-user borrower.
The restructuring program features a longer repayment period of up to ten years and a lower interest rate based on the applicable 91-day Treasury Bill rate less one percent. While the accumulated interest on rediscounted loans was allowed to be paid in equal monthly amortizations of five or ten years, it shall not be subject to interest. Moreover, liquidated damages and penalties for past due loans on rediscounting are waived.
To extend the assistance to end-user borrowers, Governor Tetangco said that a cap of 8.0 percent over and above the applicable BSP interest rate has been provided on the interest rate that may be charged by the bank to its end-user borrowers. The Governor added that a grace period of six months to pay the first amortization is included in the restructuring package to give enough time to banks and end-user borrowers to recover. Participating banks with established rediscounting lines will continue to be allowed access to the rediscounting facilities of the BSP. The loan settlement scheme is available for a period of one year or until 7 December 2007.