BSP unveils P200-M calamity assistance fund for rural banks

The Bangko Sentral ng Pilipinas has opened a P200-million assistance program for rural banks, cooperative banks and thrift banks, which can be tapped by financial institutions affected by natural calamities. The program is an initiative of the BSP, the Philippine Deposit Insurance Corp. and Land Bank of the Philippines which would act as lending agency to countryside financial institutions. "Natural disasters and calamities are part of the rural economy, it is a real problem for financial institutions that operate in the areas most prone to these costly economic disruptions," BSP Gov. Amado M. Tetangco Jr. said. According to Tetangco, the economic impact of calamities ultimately affect rural financial institutions since their client-base are often dramatically dislocated by them. "This is a way of helping those affected by calamity," Tetangco said. Tetangco said the program would run for a period of ten years, offering longer-term loans of up to seven years with a fixed rate of 9 percent per annum payable on a quarterly basis. "These would be clean loans that would require only post-dated checks as security," he said. The LandBank, according to Tetangco, would be lending up to 90 percent of the affected existing portfolio of the CFI borrower or P5 million per CFI, whichever is lower. The program is an offshoot of the BSP's post-calamity program in 2006 when it allowed the restructuring of the outstanding rediscounting obligations of all operating banks with branches in areas affected by typhoon Reming. After that program however, the Monetary Board directed the BSP to develop a more comprehensive assistance program for CFIs in case of calamities. "Given our country's history, this calamity assistance program will be most helpful in the countryside where many of our poor reside," Tetangco explained. - GMANews.TV