BSP gives another 30-day grace period for loans during modified ECQ

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(FILE PHOTO)

Metro Manila (CNN Philippines, May 19) – Borrowers will get more time to settle loans falling due this May, with the Bangko Sentral ng Pilipinas saying that the 30-day grace period still applies as parts of the country are placed under modified enhanced community quarantine.

A memorandum issued by Bangko Sentral ng Pilipinas Governor Benjamin Diokno clarified that all loans falling due until end-May are eligible for another one-month payment extension.

"The MECQ shall have the same effect as the enhanced community quarantine with respect to the application of the mandatory grace period for the payment of all loans falling due within the period of MECQ," read Diokno's Memorandum No. M-2020-042 signed Monday.

"In this respect, lending institutions shall implement a 30-day grace period for all loan payments with principal and interest falling due within the period of MECQ, without incurring interest in interest, penalties, fees and other charges."

The additional leeway is pursuant to the Bayanihan to Heal as One Act.

The extension also applies to loans which were due March and April, but have been extended by virtue of the same law granting a grace period for amortization payments.

On Saturday, the Inter-Agency Task Force for the Management of Emerging Infectious Diseases brought back Cebu City and Mandaue City under ECQ for May 16 to 31. The body also placed Metro Manila, Laguna, Bataan, Bulacan, Nueva Ecija, Pampanga, Angeles City, and Zambales under modified ECQ. Some businesses have been allowed to reopen in these areas, but strict stay-at-home policies remain unless residents are out to buy essential supplies or are off to work for authorized industries.

The central bank said the mandatory extension of payment deadlines applies to all loans extended by banks and other financial firms "irrespective of their place of operation."

However, the BSP clarified that the grace period for loan settlement will be lifted if all provinces and cities in the country are downgraded from the ECQ or MECQ status. Regular payments will resume once the Philippines moves to general community quarantine.

No liquidity woes

The BSP chief also asserted Tuesday that the country will not need to tap a short-term lifeline from the International Monetary Fund amid the coronavirus pandemic.

Diokno told reporters that he sees "no apparent and immediate need" to avail of the IMF's short-term liquidity line, which is offered to member-states to help them have additional cash to respond to domestic funding needs.

He cites the Philippines' "strong" position as seen with the balance of payments surplus, a stable peso, hefty dollar reserves, and manageable debt burden. The BSP has launched several liquidity-boosting moves in recent months, such as a ₱300-billion credit line to the National Treasury, interest rate reductions, and cuts in bank reserve requirements meant to reduce borrowing costs and make access to cash easier.