^

BSP eases lending process for OFWs

Lawrence Agcaoili (The Philippine Star) - December 2, 2019 - 12:00am

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) has eased the guidelines on the granting of consumer loans to overseas Filipino workers to facilitate the access of OFWs to bank credit.

BSP Deputy Governor Francisco Dakila Jr. said the Monetary Board issued Resolution 1729 approving the amendment to the policy on peso consumer loans to OFWs, non-immigrants and embassy officials and its employees.

This is in line with the central bank’s financial inclusion and empowerment agenda.

With the changes, banks can now grant consumer loans to OFWs without prior BSP approval.

The revised guidelines likewise liberalized the rules limiting the grant of peso consumer loans to certain types of visa holders.

In particular, peso consumer loans, except residential real estate and housing loans, may also be extended to all eligible foreign nationals with valid visa issued by relevant Philippine authorities.

Likewise, embassy officials and employees based in the Philippines are allowed to avail any type of peso consumer loans.

“In this respect, the BSP expects the lending bank to adhere to sound credit underwriting practices and to institute appropriate measures to mitigate credit and other risks involved in granting peso consumer loans to OFWs and eligible foreign nationals,” Dakila said.

The new guidelines promote greater access to bank financing for these borrowers, while expanding and broadening market segment for banks.

OFWs are considered as heroes as the money they send to their families in the Philippines usually fuel personal consumption, helping sustain a steady economic growth. Remittances usually account for 10 percent of gross domestic product (GDP).

Latest data showed personal remittances composed of cash and non-cash items that flow through both formal or via electronic wire and informal channels such as money or goods carried across borders increased by 3.6 percent from January to September to $24.64 billion from $23.71 billion in the same period last year.

Likewise, cash remittances coursed through banks increased by 4.2percent to $22.19 billion from $21.29 billion.

On the other hand, credit growth fell below the double-digit level as end-October despite the decision of the BSP to reduce the level of deposits banks are required to keep with the central bank to boost their lending portfolios.

Bank lending growth eased to 9.3 percent in October from 10.5 percent in September amid the slower rise in loan disbursements to the production sector.

Apart from the rate cuts, the BSP has also lowered the reserve requirement for big- and mid-sized banks by 400 basis points and for small banks by 200 basis points for same banks to free up much needed funds to accelerate credit growth and boost economic activity.

Liquidity or money supply in the financial system booked a faster growth of 8.5 percent to P12.13 trillion as of end-October from P11.17 trillion a year ago. 

BSP LOANS OFW
Philstar
  • Latest
  • Trending
Latest
Are you sure you want to log out?
X
Login

Philstar.com is one of the most vibrant, opinionated, discerning communities of readers on cyberspace. With your meaningful insights, help shape the stories that can shape the country. Sign up now!

FORGOT PASSWORD?
SIGN IN
or sign in with