BSP | Memorandum No. M-2020-068 | Bayanihan to Recover As One Act 

Bangko Sentral ng Pilipinas

60-day grace period

Republic Act No. 11494

BSP requires 60-day grace period for all loans due within the year

BSP issues Memorandum No. M-2020-068 requiring a 1-time 60-day grace period for all loans falling due on or before 31 December 2020

The Bangko Sentral ng Pilipinas ("BSP") recently issued Memorandum No. M-2020-068 dated 18 September 2020 implementing Section 4 (uu) of Republic Act No. 11494 of the "Bayanihan to Recover As One Act", which took effect last 15 September 2020.

The Memorandum requires all BSP supervised financial institutions ("BSFI") (e.g. banks, quasi-banks, financing companies, lending companies) to implement a mandatory 1-time sixty (60) day grace period to all loans that are existing, current and outstanding falling due, or any part thereof, on or before 31 December 2020.

The mandatory 1-time sixty (60) day grace period applies to each loan of individuals and entities with multiple loans.

What types of loans are covered?

The loans covered include, but are not limited to:

  • Salary;
  • Personal;
  • Housing;
  • Commercial;
  • Motor vehicle loans;
  • Amortizations;
  • Financial lease payments;
  • Premium payments; and
  • Credit card payments.

Can the BSFI charge interest for the additional sixty (60) day grace period?

The BSFI will not charge or apply interest on interest, penalties, fees or other charges during the mandatory 1-time sixty (60) day grace period to future payments/amortizations of the borrowers.

BSFI's are likewise prohibited from requiring their clients to waive the application of the provisions of the "Bayanihan to Recover As One Act." Any waiver executed by borrowers covering payments falling due until 31 December 2020 will not be valid.

When should the accrued interest be paid?

The borrower may pay the accrued interest for the 1-time sixty (60) day grace period on staggered basis until 31 December 2020. The borrower however is not precluded from paying the accrued interest in full on the new due date.

The borrower and BSFI may agree to a: (a) grace period longer than sixty (60) days; and (b) payment of accrued interest on staggered basis beyond 31 December 2020.

How this affects you

As a borrower with a loan that falls due on or before 31 December 2020, you can avail of the 1-time sixty (60) day grace period to give yourself breathing room in your loan payments.

As a lender, you should implement the 1-time sixty (60) day grace period in order to avoid any penalties from the BSP and regulatory violations.

Need to talk to a lawyer?

If you need to consult a lawyer on (a) the BSP's Memorandum No. M-2020-068; and (b) how to comply with the Memorandum, our Partner Lawyers are ready to help you.

Submit your legal question using our “Ask an Attorney” service and a lawyer will contact you within 3 business days to advise you.


The Legal Tree team
Mobile: +63 908 633 5638