BSP provides relief to bank borrowers in El Niño-hit areas

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) has granted relief to borrowers of banks in areas declared under a state of calamity by the National Disaster Risk Reduction and Management Council (NDRRMC) due to El Niño.

The regulatory and rediscounting relief measures for banks and non-bank financial institutions with quasi-banking functions in affected areas were approved by the BSP last May 13 as borrowers in the affected provinces are facing difficulty in paying their loans due to severe drought conditions.

“These circumstances warrant BSP’s immediate response through the grant of regulatory and rediscounting relief measures in areas which have been or may be declared by the NDRRMC or the local Sanggunian, upon the recommendation of the regional or local disaster risk reduction management as under a state of calamity,” the BSP said.

The measures, the BSP said, would be in effect for one year reckoned from the date of declaration of state of calamity and covered by additional specific and other prudential conditions.

“By providing regulatory relief, these financial institutions will be able to provide debt relief to their borrowers,” the central bank said.

Relief measures to be extended to thrift, rural and cooperative banks include 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 as well as reduction of the five percent general loan loss provision to one percent for restructured loans of borrowers.

Likewise, the penalties on legal reserves deficiencies of banks with head offices or branches in the affected areas would not be imposed, while a moratorium on monthly payments due to BSP for banks with ongoing rehabilitation programs.

Subject to BSP approval, the booking of allowance for probable losses on a staggered basis over maximum of five years for all types of credits extended to individuals and businesses directly affected by El Niño.