Regulatory Relief for BSP-supervised Financial Institutions (BSFIs) Affected by the Corona Virus Disease 2019 (COVID-19)

This accounting alert circulates the guidelines issued by the BSP to encourage BSFIs to provide financial relief to their retail customers, corporate clients and employees affected by the outbreak of the COVID-19.

Introduction

The Monetary Board, in its Resolution No. 397 dated March 13, 2020, approved the granting of temporary regulatory and rediscounting relief measures to BSFIs. The BSP recognizes that the outbreak of COVID-19 have potential significant impact on the operations of BSFIs in terms of risks related to exposures to borrowers and/or industries or businesses severely disrupted or affected by the COVID-19 as well as disruption in operations due to measures implemented to control the spread of virus such as lockdown situation, localized work suspension, heightened health and safety risks faced by BSFI's employees and customers.

Requirements

In its Memorandum No. M-2020-008, the BSP provides regulatory relief to all eligible BSFIs up to one (1) year from March 8, 2020, and may be extended depending on the developments of the COVID-19 situation. Prior to availment of such regulatory relief package, BSFIs shall submit, through the appropriate supervising department of the BSP, the following:

  1. Letter-notification stating the BSFI's intention to avail of the regulatory relief package, signed by the BSFI's president or officer of equivalent rank, provided, that the notice shall specify, at a minimum, the specific relief measures to be availed and the affected offices of the BSFI; and,
  2. Resolution of the Board of Directors authorizing the BSFI to avail of the regulatory relief package

The application of BSFIs for the availment of regulatory relief package shall be evaluated by the BSP on a case-to-case basis.

Regulatory Relief Measures

Annex A of the Memorandum lists down the regulatory relief measures available for BSFIs, which includes the following:

  1. Allowing BSFIs to provide financial assistance to officers who are affected even in the absence of BSP-approved purposes or even if not within the scope of the existing BSP-approved purposes, for the grant of loans, advances, or any other forms of credit accommodations to officers, subject to subsequent submission of request for approval within 30 days from the approval thereof of the BSFI's Board of Directors to the appropriate supervising department of the BSP for regularization.
  2. Exclusion from the computation of past due ratio of the loans of borrowers in affected areas which should have been reclassified as past due under Sec. 304/303-Q of the MORB/MORNBFI from March 8, 2020 up to 1 year thereafter (including those loans becoming past due 6 months thereafter upon grant by BSFIs of a temporary grace period for payment or upon approval of the restructuring, but subject to reporting to BSP). For this purpose, BSP documentary requirements for restructuring of loans may be waived, provided that the BSFI will adopt appropriate and prudent operational control measures.
  3. Non-imposition of monetary penalties for delays incurred in the submission of all supervisory reports due to be submitted from March 8, 2020 up to 6 months thereafter.
  4. Staggered booking of allowance for credit losses computed under Sec. 143/143-Q of the MORB/MORNBFI, over a maximum period of 5 years for all types of credits extended to individuals and businesses directly affected by COVID-19 as of March 8, 2020, subject to prior approval of the BSP.
  5. Moratorium, without penalty, on monthly payments due to the BSP, for a period of 6 months from March 8, 2020, for BSFIs with ongoing rehabilitation upon filing of application for extension/rescheduling with the Department of Loans and Credit.
  6. Non-imposition of penalties on legal reserve deficiencies computed under Sec. 255/215-Q of the MORB/MORNBFI, starting from reserve week following March 8, 2020 up to 6 months thereafter, subject to prior approval of the BSP.

Banks which intend to avail or have availed of the BSP rediscounting facility are entitled to (i) a 60-day grace period on the settlement of outstanding rediscounting obligations with the BSP, without penalty charges, (ii) restructuring of rediscounted loans of their end-user borrowers affected by the COVID-19, and (iii) relaxed eligibility criteria.

Meanwhile, during the period of availment of regulatory relief, the BSP strongly BSFIs to temporarily suspend all fees and charges imposed on the use of online banking platforms or electronic money, including those imposed on the use of Instapay or PesoNet electronic fund transfer. This will enable the general public to facilitate banking transactions during the COVID-19 situation.

See attached memorandum for the details of this publication.