The Bangko Sentral ng Pilipinas is seeking amendments to a regulation on the booking of personal property to authorize BSP-supervised financial institutions to acquire these for the settlement of unpaid loans.
According to the draft circular currently being circulated among banks and non-banks, BSFIs will be allowed to book personal property as real and other properties acquired (ROPA) for faster recovery of collateral.
The proposed circular is based on provisions under Republic Act No. 11057 or the Personal Property Security Act (PPSA).
The BSP has given BSFIs until
October 8 to submit comments or recommendations on the proposed new rule.
The PPSA, a law that modernized the legal basis for securing personal property, covers collateralized assets such as inventory, vehicles, and equipment.
The draft circular also listed non-financial assets that can be recorded as personal property, including land and buildings, agricultural products, and intellectual properties.
Since the PPSA introduced the concept of security interest, it automatically updated the old law on pledges and chattel mortgages. A security interest is a property right in personal property created to secure an obligation, the BSP said.
BSFIs can use this law for acquiring personal property to settle a loan by “enforcing” the security interest.
Based on the draft circular, banks and other BSFIs may recognize
Personal property as ROPA, once a document is in place that enforces a security interest.
The BSP said the new regulation will ensure “consistent regulatory treatment and establish clear guidelines for the recognition of personal property acquired in the settlement of loans.”
Once approved, the proposed circular will take effect 15 days after publication in a newspaper of general circulation.
