Extra time urged on debts

The Securities and Exchange Commission said it strongly encourages financing institutions to adopt measures to help ease borrowers’ financial burden

Lending companies, financing companies and microfinance nongovernment organizations (NGO) were urged to extend debt relief measures to borrowers as the economy reopens.

In a notice, the Securities and Exchange Commission (SEC) said it “strongly encourages” financing institutions to adopt measures to help ease borrowers’ financial burden owing to the adverse impact of the COVID-19 pandemic to finances.

Financing companies, lending companies and microfinance NGO may also develop and implement their own programs or schemes.

On top of the mandatory grace period indicated under Republic Act 11469 or the Bayanihan to Heal As One Act and its

Implementing Rules and Regulations (IRR), the SEC cited other measures which it said financing institutions may implement.

Relief programs

These measures include lowering interest rates; waiver or reduction of penalties, charges and other fees; payment holiday; debt consolidation; term extension for loans and provision of flexible payment schedules.

“Financing companies, lending companies and microfinance NGO may also develop and implement their own programs or schemes that will provide financial relief to their borrowers,” the SEC said.

Observe grace

Section 4(aa) of the Bayanihan to Heal as One Act mandated the implementation of a 30-day grace period for the payment of all loans.

Under the IRR, all lenders including those under SEC supervision shall apply an initial 30-day grace period to all loans with principal and/or interest falling due within the enhanced community grace period, the SEC noted.

“Aside from providing grace period, all covered institutions were prohibited from imposing interest on interest, fees and other charges to future payments or amortizations. Borrowers were likewise given the option to pay the interest accrued during the grace period on a staggered basis over the remaining life of the loan,” it said.

All lenders including those under SEC supervision shall apply an initial 30-day grace period to all loans.

The IRR provided an automatic extension of the grace period in line with the ECQ extension. The SEC earlier warned that financing and lending companies which will violate or would not comply with the law, its IRR and other applicable laws, rules and regulations shall be dealt with to the full extent of the law.