The BSP said in a statement that the rules and regulations will govern the transfer of NPAs to "Special Purpose Asset Vehicles" (SPVs) which are empowered to sell off such assets.
These regulations also cover the fees that will be charged for the transfer of these assets to the SPVs.
The central bank said the approval of these rules will improve the financial viability of banks, whose balance sheets are checkered and saddled with non-performing loans and acquired properties.
In January, President Arroyo signed the landmark law enabling banks to offload billions of dollars of bad loans to the asset vehicles.
This refers to privately-managed asset management firms, which will acquire and invest in banks’ non-performing loans and unlock much-needed credit to fuel economic growth.
BSP Governor Rafael Buenaventura had earlier estimated that once these asset management firms come into operation, they could help reduce the non-performing assets of the banking system by as much as P200 billion ($3.75 billion.)
In February, total non-performing loans in the banking system amounted to at least P250.83 billion or more than 15 percent of total loans. – AFP