MANILA, Philippines - Banks believe that the passage of a landmark piece of legislation that seeks to improve the country’s vintage insolvency law would spur bank lending in the Philippines.
Leonolo Coronel, executive director of the Bankers’ Association of the Philippines (BAP), told reporters that the passage of the Business Recovery and Insolvency Act (BRIA) could spur bank lending this year.
“Once that (BRIA) is clarified then lending would become more brisk because lenders would have a clearer picture how to resolve the problems when this arose,” Coronel said.
BRIA is the new name of the Corporate Recovery and Insolvency Act or CRIA. It seeks to revise the outdated Insolvency Act of 1909 and to provide a comprehensive and speedy process for insolvency and corporate rehabilitation proceedings.
The measure includes provisions on court-supervised rehabilitation, pre-negotiated rehabilitation, out-of-court rehabilitation proceedings, liquidation in insolvency, and cross-border insolvency proceedings.
Ultimately, the proposed amendatory law would also lead to the protection of all stakeholders.
Unlike CRIA, which covered corporations and partnerships only, the BRIA would cover natural persons who are doing business in the form of single proprietorship in line with the program of government to help small and medium enterprises (SMEs).
“If you have a clearer picture how you can resolve bankruptcy payment then lenders will lend more. Your end game is clearer,” Coronel added.
Bank lending growth fell to 4.7 percent to P2.008 trillion in end-October from P1.918 trillion in the same period last year. This was slower than the 5.9 percent growth registered in September and was the slowest since bank lending growth peaked at 24.8 percent in September last year.