PCCI seeks bank relief for borrowers

MANILA, Philippines — The Philippine Chamber of Commerce and Industry (PCCI) has renewed its call to banks and other financing institutions to grant temporary relief by extending or restructuring loans of borrowers affected by the coronavirus disease 2019 or COVID-19 pandemic.

In a statement yesterday, PCCI president Benedicto Yujuico urged the Bangko Sentral ng Pilipinas (BSP) to incentivize banks to defer or restructure loans of individual and corporate borrowers struggling with the effects of the prolonged community quarantines, under mutually acceptable and reasonable terms and conditions.

“The key to obtaining relief for our members is for the BSP to encourage and help banks to be able to support the businesses and industries hardest hit by the pandemic,” he said.

Instead of making loan deferments or restructuring prescriptive and mandatory, he said the BSP could consider the grant of regulatory relief measures such as the relaxation of rules on loan loss provisioning and staggered booking of loan loss provisions as proposed in House Bill 6815 or the Accelerated Recovery and Investments Stimulus for the Economy (ARISE) bill.

PCCI has commended the BSP for its efforts in helping banks ease the burden of companies hardest hit by the COVID-19 pandemic.

In a position paper submitted to the House of Representatives on the ARISE bill, formerly known as the Philippine Economic Stimulus Act (PESA), BSP Governor Benjamin Diokno said the central bank considers it appropriate that the provision encourages, and not compels banks to extend the term or grant restructuring to consumer and commercial loans on non-essential businesses.

“This approach will ensure that the benefit from the proposed provision will be demand driven, while enabling the requisite assessment processes for existing loan risks and borrower’s case-to-case circumstances consistent with the financial institution’s risk management framework,” Diokno said.

Yujuico said the PCCI supports ARISE bill’s provision to extend loan terms for a period of one to two years.

“We are calling on the banks to review their guidelines with a request to align with the ARISE to allow longer payment extensions so that they can respond appropriately to the big negative impact of the pandemic on many borrowers,” he said.

As borrowers provide a steady stream of revenue during good times, he appealed to the banks and other financing institutions to help revive these businesses to enable the  economy move forward.

During the lockdown, many PCCI member companies were unable to generate enough revenues to pay their debts to banks.

Through the restructuring of loans, Yujuico said businesses would be able to continue operations and allow individuals to keep their jobs.

PCCI is the country’s largest business organization. It has 35,000 members representing micro, small, medium and large enterprises.

The willingness of banks to restructure loans, Yujuico said, will breathe life back into businesses and preserve employment.

As part of their normal course of restructuring, Chamber of Thrift Banks executive director Suzanne Felix told The STAR most banks are extending relief as a service to their clients who have been hard hit by the lockdown resulting from the pandemic crisis.

“While it merely encourages financial institutions to do the restructuring, we would rather that the bill do away with this provision to avoid any misunderstanding later on as bank clients may interpret this differently,” Felix said.

Felix was referring to Section 11 of the ARISE bill that encourages banks as well as lending and financing companies to extend the principal payments on consumer and commercial loans due between March 16 and Dec. 31 this year by one year and could be extended by another period of one year.

“Even without this provision, the banks have been engaging their clients and accommodating their loan payment requests on a case-to-case basis.  I think that the decision to do so (restructuring) should best be left to the bank and its client,” Felix said.

Latest data from the central bank showed soured loans of Philippine banks went up by 18.3 percent to P252.64 billion in end-April this year from P213.51 billion in the same month last year amid the sharp raise in past due as well as restructured loans due to the pandemic.