The House of Representatives' Committee on Banks and Financial Intermediaries, in a virtual meeting on Monday, approved the proposed “Philippine Banking Industry Resiliency Act Against COVID-19 Pandemic.”
House Bill 6622, also known as the proposed “Financial Institutions Strategic Transfer (FIST) Act” authored by committee chair Rep. Junie Cua of Quirino, proposes to help financial institutions in their bad debt resolution and management of their non-performing assets to cushion the adverse impact of COVID-19 pandemic on their financial operations.
This proposed law encourages financial institutions to sell NPAs to asset management companies, created as Financial Institutions Strategic Transfer Corporations (FISTCs), that specialize in the resolution of distressed assets,” Cua said in the explanatory note of the bill.
The committee approved the bill "subject to style and amendments," said Cua.
Bangko Sentral ng Pilipinas (BSP) Managing Director for Policy and Specialized Supervision Lyn Javier in a statement to the committee said that the immediate enactment of the FIST Law, despite strong banking fundamentals, will promote investor and depositor confidence and mitigate the harmful feedback effect of a financial system crisis on the real economy.
Cua said the bill was more appropriate than simply amending Republic Act 9182 or the "The Special Purpose Vehicle (SPV) Act of 2002,” which provides for similar tax incentives for SPVs.
“My understanding from the inputs of the stakeholders is there is a need (for this bill) because there had been a lack of changes, policy interventions since then and now that need to be considered… It is better to have a new bill than just to revive it,” Cua said.
BSP General Counsel Elmore Capule agreed that “mere revival will result in a lot of gaps which we have to fill up by regulation.” This would force the Securities and Exchange Commission or the BSP to quasi-legislate.
“It’s better that we come up with a new law, update everything, especially the tax exemption privileges. And then ensure that all the new policies that have come up for the last 18 years will be included in this new law than a mere revival,” Capule said.
SEC Commissioner Ephyro Amatong said the bill seeks to apply the tax incentives only to newly transferred assets under the current COVID-19 prices.