BSP exhorts banks to cut interest rates

MANILA, Philippines - The Bangko Sentral ng Pilipinas (BSP) is urging banks to go all out in helping the victims of tropical storm Ondoy and typhoon Pepeng by cutting interest rates instead of only extending the grace period for debt payments.

BSP Deputy Governor Diwa Guinigundo said the central bank is encouraging banks to extend their assistance to individual and corporate borrowers by bringing down their interest rates.

“Hopefully, they will throw in lower interest rates to further mitigate both the households and corporations’ liquidity woes at this point,” Guinigundo stressed.

 “We have asked the banks, and many banks have started to respond favorably, to relax some of their lending guidelines including the extension of the grace or repayment period,” he added.

Most banks have reduced their interest rates by about 150 basis points since the central bank’s Monetary Board slashed its key policy rates by 200 basis points since December last year.

Commercial and universal banks have agreed to extend their grace period, adopt payment holidays, and waive remittance fees to thousands of bank clients who were affected by the natural calamities.

These banks led by Citibank, Ayala-controlled Bank of the Philippine Islands, Philippine National Bank of taipan Lucio Tan, Wells Fargo, and others have agreed to waive the fees for cash transfer services.

Guinigundo said the central bank, in return, has agreed to adopt a package of relief measures for banks to enable them to extend assistance to bank customers adversely affected by the natural calamities.

“The BSP will also provide the commercial banks, rural, thrift, and cooperative banks additional flexibility with respect to their rediscounting loans with the BSP which they use to finance their own lending to their clients,” he added.

Last Oct. 1, the central bank’s Monetary Board approved a package of relief measures wherein the existing loans of borrowers in affected areas would be excluded from the computation of past due ratios provided these are restructured or given relief.

Furthermore, the general loan loss provision for restructured loans of borrowers in affected areas would be reduced to one percent from five percent. The penalties for delays in the submission of supervisory reports were also suspended.

Entitled to the relief measures are banks located in the National Capital Region, Mt. Province, Ifugao and Benguet, Pangasinan, La Union, Ilocos Sur, Isabela, Quirino, Nueva Vizcaya, Aurora, Nueva Ecija, Zambales, Pampanga, Bulacan, Tarlac, Bataan, Cavite, Laguna, Batangas, Rizal, Quezon, Mindoro Occidental, Mindoro Oriental, Marinduque, Catanduanes, Camarines Norte and Camarines Sur.