Closed banks’ borrowers get more loan relief

MANILA, Philippines — State-run Philippine Deposit Insurance Corp. (PDIC) has enhanced its loan settlement program to offer bigger incentives and wider coverage for borrowers of closed banks, aiming to help more people settle their debts and avoid foreclosure.

Now rebranded as the Closed Bank Loan Incentive Program (CLIP) 3.0, the program offers higher discounts and expanded eligibility to borrowers willing to settle their outstanding loans in full through a one-time cash payment.

“Under the enhanced program, the qualifying principal balance threshold has been raised to P10 million from P5 million, making the incentives available to more closed bank borrowers,” the PDIC said.

Borrowers from banks closed in 2023 and earlier, with clean loans or loans backed by chattel mortgage or pledge, can also receive up to 50 percent discount on their outstanding principal, plus a full waiver on interest, penalties and other charges.

Those with loans secured by real estate mortgages (REM) can benefit from lower unbooked interest rates, as low as three percent per annum as well as full waivers of penalties and charges.

Previously, discounts for clean loans were capped at 30 percent and unbooked interest for REM-secured loans could only go down to five percent per annum.

For borrowers of banks closed in 2024 and 2025, the incentives include a 50-percent discount on the principal for clean or chattel-secured loans and reduced interest for REM-backed obligations at five percent per annum, alongside full waivers for penalties and charges.

Qualified borrowers must pay in full via a one-time settlement within one year of receiving notice from PDIC or until Dec. 31, 2025, depending on when their bank was closed.

Originally launched in 2021, CLIP is designed to help closed bank borrowers retain their creditworthiness and protect their mortgaged properties. As the statutory receiver of closed banks, the PDIC recovers unpaid loans to boost funds for creditor claims.