Bankers group welcomes signing of FIST law, says it will help the economy recover

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Metro Manila (CNN Philippines, February 18) — The Bankers Association of the Philippines welcomed the signing of the Financial Institutions Strategic Transfer bill into law, saying it would help in the country's economic recovery.

"With this measure, banks can gradually recover from non-performing loans (NPLs) that have increased due to the pandemic. As financial institutions utilize the special purpose vehicles, banks may now continue to increase lending activities to help spur economic activity," BAP said in a statement on Thursday.

President Rodrigo Duterte signed the FIST law on Wednesday, a measure allowing banks to sell bad loans to asset management companies.

Under Republic Act 11523 or the FIST Act, covered corporations will now be allowed to engage third parties to manage, operate, collect, and dispose of non-performing assets acquired from a financial institution.

The measure is seen as an improved version of the Special Purpose Vehicle Act of 2002, which was enacted in response to the Asian financial crisis. It now covers lending companies and other institutions licensed by the Bangko Sentral ng Pilipinas to perform as credit-granting companies.

One-person corporations and government financial institutions are prohibited from setting up their own FIST corporations.

Bangko Sentral ng Pilipinas Governor Benjamin Diokno also welcomed the development.

"The new law will help keep the banking system stable despite the effects of the COVID-19 pandemic," he tweeted.

Diokno said the draft Implementing Rules and Regulations of the measure is already with the Securities and Exchange Commission as the lead agency, with additional inputs from the BSP.

The FIST Act will take effect immediately after it is published in the Official Gazette and a newspaper of general circulation. Congress ratified the bicameral conference committee report on Senate Bill 1849 and House Bill 6816 in December 2020 after Duterte certified the measure as urgent due to the pandemic.

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