BSP Memo. No. 2020-017 on the 30-day Grace-Period on Loan Payments

Updated as of 11 June 2020

On 01 April 2020, the Bangko Sentral ng Pilipinas (BSP) issued BSP Memo No 2020-017 providing for the implementing rules and regulations (IRR) on the 30-day grace period on loan payments under R.A. No. 11469 or the “Bayanihan to Heal As One Act.”

In the said Memo, all BSP-Supervised Financial Institution (BSFIs) are required to comply with Section 4 (aa) of R.A. No. 11469 or the “Bayanihan to Heal As One Act” and its IRR.

Covered Institutions are all lenders, including but not limited to banks, quasi-banks, non-stock savings and loan associations, credit card issuers, pawnshops and other credit granting financial institutions under the supervision of the BSP, the Securities and Exchange Commission and the Cooperative Development Authority, public or private, including the GSIS, SSS and Pag-IBIG Fund.

It mandates all Covered Institutions to implement a 30-day grace period to all loans with principal and/or interest falling due within the Enhanced Community Quarantine (ECQ) period (17 March 2020 to 12 April 2020), without incurring interest on interest, penalties, fees and other charges. The 30-day grace period shall apply to each loan of individuals and entities with multiple loans. Should the President extend the ECQ period, the initial 30-day grace period shall automatically be extended.

Covered Institutions are prohibited from charging or applying interest on interest, fees and charges during the 30-day grace period to future payments/amortizations of the borrowers. They are likewise prohibited from requiring their clients to waive the application of the provisions of the “Bayanihan to Heal As One Act”. No waiver previously executed by borrowers covering payments falling due during the ECQ period shall be valid.

The IRR also allows the borrower to pay the accrued interest for the 30-day grace period on a staggered basis over the remaining life of the loan. Such, however, shall not preclude the borrower from paying the accrued interest in full on the new due date.

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