BSP orders banks to implement 60-day grace period on loan payments

The Bangko Sentral ng Pilipinas (BSP) on Friday ordered all banks and financial institutions to comply with the provision in the Bayanihan to Recover as One Act which grants a 60-day grace period on the payment of loans.

In a memorandum signed September 18, BSP Governor Benjamin Diokno required all central bank-supervised financial institutions to comply with the Section 4(uu) of Republic Act No. 11494 or the Bayanihan 2, which took effect on September 15.

The said provision requires all covered institutions to implement a mandatory one-time 60-day grace period to all loans that are existing, current and outstanding falling due, or any part thereof, on or before December 31, 2020.

The mandatory one-time 60-day grace period shall apply to each loan of individuals and entities with multiple loans.

“BSFIs (BSP-Supervised Financial Institutions) shall not charge or apply interest on interest, penalties, fees or other charges during the mandatory one-time 60-day grace period to future payments/amortizations of the borrowers,” Diokno said.

“They are likewise prohibited from requiring their clients to waive the application of the provisions of the ‘Bayanihan to Recover as One Act’,” he said.

The BSP chief said no waiver previously executed by borrowers covering payments falling due until December 31, 2020 shall be valid.

“The accrued interest for the one-time 60-day grace period may be paid by the borrower on a staggered basis until December 31, 2020. Nonetheless, this shall not preclude the borrower from paying the accrued interest in fill on the new due date,” Diokno said.

The central bank chief said that parties may agree to a grace period longer than 60 days and/or payment of accrued interest on staggered basis beyond December 31, 2020. -NB, GMA News