Good news for borrowers: Philippines announces loan relief, fee cuts

Dubai: Borrowers and businesses are set to get temporary relief as the Bangko Sentral ng Pilipinas (BSP) rolls out regulatory support measures following a surge in energy prices tied to geopolitical developments in the Middle East.

The measures, approved under Monetary Board Resolution No. 296, has come after the Philippine government declared a state of national energy emergency on March 24.

The BSP has noted that the relief package is designed to sustain lending activity while helping affected borrowers recover from financial strain caused by rising fuel costs and supply constraints.  

These measures will be extended to BSP-supervised financial institutions (BSFIs) and their clients.

“These measures include, among others, the grant of temporary grace periods of up to six months for loan payments of affected borrowers, and the deferment of agricultural loan payments for up to one year, subject to bank assessment,” said BSP in a statement.

In addition, loans of affected borrowers may be temporarily excluded from past due and non-performing classifications for up to one year. This is subject to notification and reporting requirements.

The Philippine central bank has stressed that financial institutions must apply the relief measures only to borrowers whose repayment capacity has been materially affected by the energy emergency.

“BSFIs are expected to exercise prudent judgment in availing these measures,” stated BSP.

Moreover, it has emphasised that the use of these measures should remain “targeted, proportionate, and consistent” while still maintaining sound banking management practices.

To further ease the burden, the BSP has also encouraged banks and e-money providers to temporarily suspend fees on digital platforms.

This includes charges on online banking and fund transfer services such as InstaPay and PESONet.

Lower transaction costs have been eyed to help consumers and businesses manage expenses and reduce the need for travel at a time of elevated fuel prices.

Meanwhile, the BSP has reiterated that the move reflects its support for consumers during a period of global uncertainty.

“The BSP remains committed to promoting financial stability, financial consumer protection, and overall financial health amid the energy emergency,” said the central bank.

With Middle East developments continuing to influence global energy markets, authorities are closely monitoring the situation and stand ready to respond as needed.