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Summary of Regulatory Relief Granted by BSP to Rural Banks

As a response to RBAP’s proposal for the rehabilitation of rural banks affected by Super Typhoon Yolanda, the Bangko Sentral ng Pilipinas (BSP) granted the following:

For the rehabilitation of the bank’s manpower:

1. Direct financial assistance beyond the limits of each affected rural banks BSP-approved Financial Assistance Program for bank staff as per BSP Memorandum M-2013-050;

2. Extraordinary safeguarding by banks of the existing accounts of each affected bank staff:
a. For deposit accounts – exemption from dormancy for 5 years as per Section X263 of the MORB;
b. For loan accounts – suspension of interest and all charges for 5 years;

3. One-time write off of one existing loan per staff as per BSP Memorandum M-2013-050

For the rehabilitation of rural banks:
1. Banks must apply for immediate application of BSP’s regulatory relief measures;

2. Exemption from all fees due to the regulators for 5 years is allowed to include non-imposition of penalties as per BSP Memorandum M-2013-050;

3. Extraordinary safeguarding by banks of the existing accounts of each affected rural bank
a. For deposit accounts – exemption from dormancy for 5 years
b. For loan accounts – suspension of interest and all charges for 5 years.

4. Restructuring of affected loans rediscounted with other banks including BSP and LBP

For the rehabilitation of the affected rural bank clients
1. Extraordinary safeguarding by banks of the existing accounts of each affected bank client:
a. For deposit accounts – exemption from dormancy for 5 years
b. For loan accounts – suspension of interest and all charges for 5 years.
2. One-time write off of one existing loan per client.

Meanwhile, BSP also extended their temporary regulatory and rediscounting relief to banks with head offices and/or branches affected by Super Typhoon Yolanda in the following form:

For thrift, rural and cooperative banks
a. During a temporary grace period for payment or upon their restructuring and subject to reporting to BSP, exclusion of the loans of borrowers in affected areas, which should have been reclassified as past due loans under Section X306 of the MORB on 8 November 2013 (date Typhoon “Yolanda” hit the country) and those becoming past due up to 31 December 2014, from computation of past due loan ratio; provided that BSP documentary requirements for restructuring of loans for this purpose are waived; provided further that the bank will adopt appropriate and prudent operational controls;

b. Reduction of the 5 percent general loan loss provision to 1 percent for restructured loans to borrowers in affected areas from 8 November 2013 to 31 December 2014;

c. Non-imposition of penalties on legal reserve deficiencies or TBs/RBs/Coop Banks with head office and/or branches in the affected areas incurred starting from reserve weeks ended 14 November 2013 to 15 May 2014 provided these reserve deficiencies can be shown to be calamity related as certified by the bank rather than due to pre-existing conditions;

d. Moratorium without penalty on monthly payments due to the BSP until 30 June 2014 for banks with ongoing rehabilitation programs upon filing of application for extension/rescheduling;

e. For all types of credits extended to individuals and businesses directly affected by the calamity, allowing, subject to BSP prior approval, the booking of allowances for probable losses on a staggered basis over a maximum period of five years on loans outstanding as of 8 November 2013; and

f. Non-imposition of monetary penalties for delays in the submission of all supervisory reports due to be submitted from 8 November 2013 to 30 June 2014.

For all banks
a. Allowing banks to provide financial assistance to their officers and employees who were affected by the calamity even if not within the scope of the existing BSP-approved Fringe Benefit Program (FBP) subject to subsequent submission of request for approval of the amendment to FBP to the appropriate supervision and examination department for regularization.