The Bangko Sentral ng Pilipinas ordered banks to implement a mandatory one-time 60-day, grace period to all loans of individuals and entities following the passage of the Bayanihan to Recover as One Act into law.
It said the move would help individuals and businesses recover from the impact of the COVID-19 pandemic that battered the economy since early this year. The memorandum also requires banks not to impose interest on interest, penalties, fees or other charges during the grace period.
BSP Governor Benjamin Diokno said he signed an order on Friday requiring financial institutions to comply with Section 4(uu) of Republic Act No. 11494, or Bayanihan 2, that took effect on Sept. 15, 2020.
Diokno said all BSP-supervised financial institutions should comply with the memorandum immediately.
Section 4(uu) requires all covered institutions to implement a mandatory one-time grace period of two months to all loans that are existing, current and outstanding falling due, or any part thereof, on or before Dec. 31, 2020.
“The mandatory one-time 60-day grace period shall apply to each loan of individuals and entities with multiple loans,” the memorandum said.
It said BSP-supervised financial institutions should not charge or apply interest on interest, penalties, fees or other charges during the grace period to future payments or amortizations of the borrowers.
“They are likewise prohibited from requiring their clients to waive the application of the provisions of the Bayanihan to Recover as One Act. No waiver previously executed by borrowers covering payments falling due until Dec. 31, 2020 shall be valid,” it said.
The accrued interest for the one-time 60-day grace period may be paid by the borrower on staggered basis until the end of the year. Nonetheless, this should not preclude the borrower from paying the accrued interest in full on the new due date, the memorandum stated.
It said the parties may agree to a grace period longer than 60 days and/or payment of accrued interest on staggered basis beyond Dec. 31, 2020.