House panel OKs bill aiding banks, financial institutions amid COVID-19 crisis
The plenary hall of the House of Representatives. (File photo from the Philippine Daily Inquirer)
MANILA, Philippines — The House committee on banks and financial intermediaries on Monday approved a bill seeking to help banks and other financial institutions offload their non-performing assets (NPAs) to cushion the impact of the COVID-19 pandemic to their operations.
During an online hearing, the committee approved House Bill No. 6622 or the Philippine Banking Industry Resiliency Act Against COVID-19 pandemic proposed by Quirino 1st District Rep. Junie Cua.
Cua also serves as the chair of the said committee.
“The State recognizes the role of banks and other financial institutions as mobilisers of savings and investments for the country’s growth and development. These financial institutions are main components of the financial system and their continued financial health is critical to the maintenance of financial stability,” the bill’s explanatory note reads.
“It is essential, therefore, that banks and other financial institutions are able to maintain their financial health to be effective partners of the National Government in helping our country ‘heal as one’ from the adverse economic effects of the COVID-19 pandemic,” it adds.
The bill seeks to extend support to financial institutions in disposing of their NPAs by granting them tax exemptions and reduced registration and transfer fees on certain transactions involving NPAs.
NPAs consist of financial institutions’ non-performing loans, and real and other properties acquired in settlement of loans and receivables, the bill explains.
In the bill, Cua explained that most financial institutions are “facing a period of delayed loan collections and are at risk of recording higher non-performing assets across all borrower segments.”
This poses a problem because NPAs prevent banks and other financial institutions from effectively performing their role in financial intermediation, Cua said.
“Thus, this bill proposes the enactment of the Financial Institutions Strategic Transfer (FIST) Law which aims to help financial institutions in their bad debt resolution and management of their NPAs in order to cushion the adverse impact of COVID-19) pandemic on their financial operations,” the bill states.
JPV
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