Sans order for loan moratorium, BSP asks lenders to offer relief


THE Bangko Sentral ng Pilipinas (BSP) urged local lenders to give relief to their loan customers during the enhanced community quarantine (ECQ) this month.

However, the BSP did not issue a mandatory moratorium or grace period for loans during the (ECQ) period from August 6 to 20.

In a statement over the weekend, the Central Bank said it is urging BSP-supervised financial institutions (BSFIs) to renew, restructure, or extend the terms of the loans of their clients in consideration of their cash flows.

The BSP said bank clients may continue to approach their banks for financial relief despite not having a mandatory moratorium for loans.

“Banks and their clients may agree on loan terms that fit the bank’s financial capability and the client’s financing requirements,” the BSP said. The BSP has earlier granted prudential relief measures to BSFIs to allow them to continuously provide financial services and support households and businesses amid the pandemic.

“The BSP continues to monitor the impact of the health crisis on the financial industry and the economy to promptly address any emerging risks and to support sustainable economic recovery,” the BSP said.

Bank lending in the country has been severely hit by pandemic-related restrictions since last year.

According to the Central Bank’s latest data, outstanding loans of universal and commercial banks decreased by 2 percent in June this year from its level in the same month last year. While still in contraction mode, this is slower than the 4 percent decrease seen in May this year.

Bank lending first collapsed into the contraction territory in December 2020 by 0.7 percent. June is the seventh consecutive month of bank lending contraction despite the aggressive efforts of the BSP to lower interest rates and boost liquidity conditions.

In comparison, the Philippines’ bank lending grew 13.6 percent before the onslaught of the global health crisis in March 2020.

Consumer loans to residents, in particular,  went down by 8.6 percent in June from a 9.2-percent decrease in May as motor vehicle loans and salary-based consumption loans declined further.

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