The Management Association of the Philippines said the 60-day loan moratorium under the Bayanihan to Recover as One act can be a good compromise if the 30-day period is not workable as long as it is done once and not extended.
The MAP said in a statement over the weekend, the loan reprieve”•proposed to alleviate the plight of the people amid the onslaught of the COVID-19 pandemic”•should also exclude insurance and pre-need companies as they might find it difficult to provide claims, especially COVID-related deaths.
"While the MAP supports the 30-day moratorium under the Senate version, 60 days will be a good compromise if 30 days is not doable, provided that it is a one-time and non-extendible payment moratorium,” MAP president Francis Lim said.
He said pre-need companies must provide the medical and hospitalization claims of COVID patients and the tuition and other educational needs of children as school opening is just around the corner.
“This is not even to mention that the moratorium may adversely affect the financial viability of the smaller enterprises, most of which are Filipino companies,” Lim said.
Earlier, the MAP backed the sentiment of the Bangko Sentral ng Pilipinas when the regulator said the proposed 365-day loan moratorium under the House version of the Bayanihan to Recover as One act would the stability of the banking system put at risk.
BSP Governor Benjamin Diokno said the financial system could be adversely affected if the provision under the Bayanihan 2 was signed into law.
Lim said the 365-day loan moratorium under the House version of the Bayanihan 2, while ostensibly good for the people in the short run, might have unintended adverse consequences for the country that could potentially exacerbate the negative impact of the pandemic.
“The moratorium will put to risk our banks' ability to service the withdrawals of their clients and adversely affect public confidence in the banking system. It will also drastically lessen the banks’ liquidity, curtailing their capacity to lend at a time when businesses badly need capital to help them recover from the pandemic,” Lim said.
“This will cause grave damage to the economy that will require significant resources and time to repair,” Lim said.
Available figures show at least P11 trillion, or roughly 78 percent of the total P14 trillion deposits, have lent to the public and around 70 percent of the depositors are non-borrowers.
Approved by the House of Representatives Monday last week, House Bill 695 proposes to direct all banks, financing firms, property developers, and insurance companies, as well as public and private credit-granting units to implement a 365-day grace period or staggered payment arrangements for all loans, amortizations, and even credit card payments without the borrower incurring additional charges.
Loan terms may be extended for another year to give time for borrowers to recover their finances following the series of lockdowns implemented by the government since March this year to contain the further spread of the pandemic.
Diokno assured the banking industry remained sound but others might be adversely affected if the proposal is passed into law. He said a sound banking was one of the reasons why the Philippines obtained affirmations from credit rating agencies.
The earlier Bayanihan to Heal as One Act provided a 30-day grace period for loan, rent and utility payments in areas placed under enhanced community quarantine or modified ECQ.