Bankers push for 30-day loan grace period, instead of 365-day moratorium

The Bankers Association of the Philippines (BAP) is pushing for another 30-day mandatory grace period in the payment of loans, instead of the one-year payment freeze under the House of Representatives’ version of the Bayanihan to Recover as One Act.

Under House Bill No. 6953 or the “Bayanihan 2,” approved by the House on Monday, banks, financial institutions, insurance firms, property developers, among others were directed to implemented a 365-day moratorium or grace period for the payment of loans, amortizations, without incurring additional charges.

To recall, the first Bayanihan law or the Bayanihan to Heal as One Act, banks and financial institutions were mandated to give a 30-day grace period for loan payments, at a time when most of the country was under the strictest quarantine classification.

With this, BAP managing director Benjamin Castillo said bankers are endoring a 30-day grace period extended to areas under enhanced community quarantine (ECQ) and modified ECQ.

"We have to ensure the stability and robustness of the banking system in order to help our economy pave the way towards recovery," Castillo said.

“The BAP likewise shares the concern of the Bangko Sentral ng Pilipinas that longer moratorium will impact the liquidity of the financial system and may put certain banks at risk,” he said.

Diokno has earlier warned lawmakers against the proposed 365-day moratorium on loan payments as this might pose serious risks to banks and financial institutions’ liquidity, stability as well as their ability to service withdrawals.

The central bank chief’s statement was echoed by the Management Association of the Philippines, saying the proposal will “put at risk our banks' ability to service the withdrawals of their clients and adversely affect public confidence in the banking system.”

The BAP is the lead organization of universal and commercial banks in the Philippines consisting of 45 member banks, 21 of which are local banks and 24 are foreign bank branches.

It counts as members BDO, BPI, Metrobank, PNB, RCBC, ING, EastWest Bank, Union Bank, UCPC, Citibank, among others. —LDF, GMA News