House ratifies proposed Financial Institutions Strategic Transfer Act

The House of Representatives on Wednesday ratified the bicameral committee report on the proposed "Financial Institutions Strategic Transfer (FIST) Act".

During its session, the chamber approved the bicameral report on the disagreeing provisions on House Bill 6816 and Senate Bill 1849, which seek to help financial institutions to resolve their debts and manage their non-performing assets (NPAs) to temper the effects of the COVID-19 crisis on their financial operations.

Under the measure, Financial Institutions Strategic Transfer Corporations (FISTCs) may invest in, or acquire NPAs of financial institutions and engage third parties to manage, collect, operate, and dispose of NPAs acquired from financial institutions.

In case of non-performing loans, FISTCs may also restructure debt, condone debt, and undertake other restructuring related activities, as well as renovate, improve, complete, or alter their NPAs acquired from financial institutions, among others.

House committee on banks and financial intermediaries chair Junie Cua, who introduced the measure, said the COVID-19 crisis and disruption of economic activities caused most financial institutions to face a period of delayed loan collections, and are at risk of recording higher NPAs across all borrower segments.

"This proposed law encourages financial institutions to sell NPAs to asset management companies, created as Financial Institutions Strategic Transfer Corporations (FISTCs), that specialize in the resolution of distressed assets," Cua said.

House Majority Leader Martin Romualdez, co-chair of the House Defeat COVID-19 Committee, said the FIST bill will help "strengthen the financial sector in the wake of the COVID-19 crisis through rehabilitation of distressed businesses and improving liquidity of the financial system."

The proposed FIST Act is among the priority legislation of President Rodrigo Duterte, along with the proposed Corporate Recovery and Tax Incentives for Enterprises Act, the Rural Agricultural and Fisheries Development Financing System Act, and the bill creating the Department of Overseas Filipinos.—AOL, GMA News