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.
The loans covered include, but are not limited to:
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.
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.
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.
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.
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The Legal Tree team
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