The Management Association of the Philippines and the Bankers Association of the Philippines are also opposing the proposed 365-day loan moratorium under the House version of the Bayanihan to Recover as One act, saying it will put the stability of the banking system at risk.
Bangko Sentral ng Pilipinas Governor Benjamin Diokno earlier said the financial system could be adversely affected if the provision under the Bayanihan 2 was signed into law.
MAP president Francis Lim said in a statement Friday the 365-day loan moratorium, while ostensibly good for the people in the short run, might have unintended adverse consequences for the country that could potentially exacerbate the negative impact of the pandemic.
“The moratorium will put to risk our banks' ability to service the withdrawals of their clients and adversely affect public confidence in the banking system. It will also drastically lessen the banks’ liquidity, curtailing their capacity to lend at a time when businesses badly need capital to help them recover from the pandemic,” Lim said.
“This will cause grave damage to the economy that will require significant resources and time to repair,” Lim said.
The BAP, meanwhile, endorsed a 30-day grace period extended to areas under modified enhanced community quarantine and ECQ.
"We have to ensure the stability and robustness of the banking system in order to help our economy pave the way towards recovery," BAP managing director Benjamin Castillo said in a statement.
BAP shared the concern of the Bangko Sentral that a longer moratorium would impact on the liquidity of the financial system and put certain banks at risk.
MAP's Lim, citing available figures, said at least P11 trillion, or roughly 78 percent of the total P14 trillion in deposits, have been loaned to the public and around 70 percent of the depositors are non-borrowers.
“We strongly urge the Bicameral Conference Committee to adopt the Senate version of the Bayanihan 2 which limits the moratorium to one month,” Lim said.
Approved by the House of Representatives last Monday, House Bill 695 directs all banks, financing firms, property developers, and insurance companies, as well as public and private credit-granting units to implement a 365-day grace period or staggered payment arrangements for all loans, amortizations, and even credit card payments without the borrower incurring additional charges.
Loan terms may be extended for another year to give time for borrowers to recover their finances following the series of lockdowns implemented by the government since March this year to contain the further spread of the pandemic.
Diokno assured the banking industry remained sound but others might be adversely affected if the proposal was passed into law. He said a sound banking was one of the reasons why the Philippines obtained affirmations from credit rating agencies.
The Bayanihan to Heal as One Act provided a 30-day grace period for loan, rent, and utility payments in areas placed under enhanced community quarantine or modified ECQ.