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BSP Grants Regulatory Relief to Banks Affected by El Nino

05.19.2016

The Bangko Sentral ng Pilipinas is granting regulatory and rediscounting relief measures to banks/non-bank financial institutions with quasi-banking functions (NBQBs) with head offices and/or branches located in areas affected by the El Niño phenomenon.

Due to severe drought conditions affecting several provinces, borrowers in the affected areas could face difficulty in paying their loans. These circumstances warrant BSP’s immediate response through the grant of regulatory and rediscounting relief measures to banks and NBQBs with head offices and/or branches located in the areas which have been or may be declared by the National Disaster Risk Reduction Management or the local sanggunian, upon the recommendation of the Regional or Local Disaster Risk Reduction Management as under a state of calamity. By providing regulatory relief, these financial institutions will be able to provide debt relief to their borrowers.

As approved on 13 May 2016 by the Monetary Board (MB), the BSP’s policy-making body, the relief measures include the:

For Thrift Banks (TBs)/Rural Banks (RBs)/Cooperative (Coop) Banks/NBQBs

  1. Exclusion of the outstanding loans of borrowers in the affected areas from the computation of past due ratios provided these are restructured or given relief;
     
  2. Reduction of the 5 percent general loan loss provision to 1 percent for restructured loans of borrowers in the affected areas;
     
  3. Non-imposition of penalties on legal reserves deficiencies of TBs/RBs/Coop Banks/NBQBs with head office and/or branches  in the affected areas;
     
  4. Moratorium on monthly payments due to BSP for banks with ongoing rehabilitation programs; and
     
  5. Subject to BSP approval, booking of allowance for probable losses on a staggered basis over maximum of five (5) years for all types of credits extended to individuals and businesses directly affected areas by the El Niño phenomenon.

For All Rediscounting Banks

  1. Grant of a 60-day grace period to all rediscounting banks in the affected areas to settle the outstanding rediscounting obligations as of declaration date of a state of calamity with the BSP; and
     
  2. Allow banks to restructure with the BSP, on a case-to-case basis, the outstanding rediscounted loans of borrowers affected by the El Niño phenomenon.

 These measures will be in effect for a period of one (1) year, reckoned from the date of declaration of a state of calamity, and covered by additional specific and other prudential conditions.

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