Incentives are key to stimulate banks in helping businesses badly affected by the coronavirus disease 2019 (COVID 19).
Instead of compelling banks to restructure loans, they should be encouraged by the Bangko Sentral ng Pilipinas (BSP) to do so, according to the Philippine Chamber of Commerce and Industry (PCCI).
PCCI President Benedicto Yujuico said such incentives can come in the form of regulatory relief measures such as the relaxation of rules on loan loss provisioning and staggered booking of the same as contained in House Bill 6815l otherwise known as the Accelerated Recovery and Investments Stimulus for the Economy (ARISE) measure.
“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, adding that the willingness of banks to restructure loans will help businesses recover and preserve jobs.
On the other hand, a group of banks said most of them are helping businesses hit by lockdowns brought by the crisis. The banks said they have been engaging their clients and accommodating their loan payment request on case-to-case basis.
On this basis, Chamber of Thrift Banks executive director Suzanne Felix finds it better that a provision in ARISE bill—Section 11—is removed since it might be misunderstood by bank clients.
Said provision 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.
Felix opined the decision to restructuring loans should best be left to the bank and its client.
Meanwhile, the PCCI lauded BSP efforts in urging banks to support companies hardest hit by the pandemic.
BSP Governor Benjamin Diokno earlier said the central bank considers it appropriate that the bill encourages, and not compels banks to extend the term or grant restructuring to consumer and commercial loans on non-essential businesses.
The 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, he said.
PCCI is the country’s largest business organization with 35,000 members representing micro, small, medium and large enterprises.