BSP sets up P200-million fund for lending to calamity areas

The Bangko Sentral ng Pilipinas (BSP) has put up a P200-million fund to support bank efforts in the reconstruction of calamity-stricken areas. The fund, which will be in place for 10 years, was set aside together with the Philippine Deposit Insurance Corp. (PDIC) and Land Bank of the Philippines. "We hope that this calamity assistance program will empower countryside financial institutions to help fund early recovery and reconstruction in affected areas," central bank Governor Amando M. Tetangco, Jr. said. Under the assistance package, thrift, rural and cooperative banks in areas declared to be in a state of calamity can borrow up to 90% of their existing portfolio or P5 million, whichever is lower. The loan is payable in seven years and carries a yearly rate of 9%. Payments will be on a quarterly basis with post-dated checks serving as collateral. The fund is part of a broader support program for financial institutions in the countryside conceived in 1991 to provide liquidity assistance to small banks in danger of collapse due to borrowers’ default, said Imelda Singzon, officer-in-charge of the PDIC. "Natural disasters adversely affect our agricultural sector, which makes up a sizeable portion of the clientele of countryside financial institutions," she added. — Maria Eloisa I. Calderon/BusinessWorld