BSP: Lending institutions prohibited from charging interest on interests, fees

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TO address consumers’ usual questions on the mandatory grace periods provided in the Bayanihan To Heal As One Act (Bayanihan Act), the Bangko Sentral ng Pilipinas (BSP) reiterates that lending institutions are prohibited from charging interests on interests, fees and charges (such as late payment fees) on all loan payments falling due within the Enhanced Community Quarantine (ECQ) and the Modified ECQ (MECQ).

The reliefs shall cover all loans extended by all BSP supervised financial institutions (BSFIs) irrespective of place of operation. These loans include salary, personal, housing and motor vehicle loans, credit card payments, as well as loans covered by post-dated checks, auto-debit or auto-deduct arrangements with lending financial institutions.

With the implementation of MECQ in certain regions, lending institutions are enjoined to implement a 30-day grace period for all loan payments with principal and interest falling due within the MECQ.

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An additional 30-day grace period for loan accounts that qualified for an initial 30-day grace period with new due date falling within the MECQ without incurring interest on interest, penalties, fees and other charges is also necessary.

Citing the implementing rules and regulations of the law, the BSP also clarifies that interest accrued during the mandatory grace period under the ECQ and MECQ will still be collected.

Said interest, however, may be paid in lump sum on the new due date or on a staggered basis over the remaining term of the loan.

“We expect BSP Supervised Financial Institutions to provide and communicate the least burdensome payment options to their clients,” said BSP Governor Benjamin E. Diokno.

“They must consider this as their patriotic duty to help the public, especially the MSMEs, during this challenging time,” he added.

The BSP also advises financial institutions and their clients to coordinate with each other. Financial consumers may also seek assistance through the BSP Consumer Assistance Mechanism.

It is important to note that the application of the mandatory grace period shall cease once the ECQ and MECQ are lifted in the entire country.

The BSP has also issued Frequently Asked Questions in this regard. To complement this, the BSP is working with partners on a communication campaign to promote e-payment of obligations, including loan amortizations and credit card payments. The campaign is assisted by the United States Agency for International development through its E-PESO Project.

 

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