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THE recent typhoons and tropical storms such as “Pedring,” “Mina” and “Juaning” have brought much devastation to various cities and provinces in the country.

While media reports normally focus on the loss of lives, resources and property, little is said about the storms’ effects on the banking system.

Figures from the Bangko Sentral ng Pilipinas (BSP) Supervisory Data Center indicate that 450 head offices and 1,812 branches of banks are located in the areas affected by September’s Pedring.

As a consequence, banks in the typhoon-affected areas have experienced the following problems:

• Higher past due loan ratio with the borrowers in the affected areas now having difficulty paying their obligations on time;

• Inability to comply with legal reserves due to an unexpected decline in loan collections; and

• Delay in the submission of mandatory regular BSP reports due to damages in bank facilities and records/systems.

The National Disaster Risk Reduction and Management Council (NDRRMC), in its report dated Oct. 11, 2011, listed 35 provinces of Regions I, II, III, IV-A, IV-B, V, VI, the National Capital Region, and the Cordillera Administrative Region as affected by Pedring.

Particularly hard hit were the provinces of Quirino, Isabela, Nueva Ecija, Nueva Vizcaya and Cavite, including the cities of Malabon, Navotas and Marikina, which were declared under a state of calamity.

To assist the thrift banks, rural banks and cooperative banks in these areas, the Monetary Board has approved the grant of temporary regulatory relief, as follows:

• The exclusion of borrower loans in affected areas during a temporary grace period for payment or upon their restructuring and subject to reporting to the BSP;

• The reduction of the five percent general loan loss provision to one percent for restructured loans to borrowers in affected areas;

• The non-imposition of penalties on legal reserve deficiencies;

• Moratorium without penalty on monthly payments due to the BSP;

• The booking of allowances for probable losses on a staggered basis over a maximum period of five years for all types of credit;

• The non-imposition of monetary penalties for delays in submission of supervisory reports; and

• The provision by banks of financial assistance to typhoon-affected officers and employees.

Also, rediscounting banks are granted a 60-day grace period to settle outstanding rediscounting obligations upon application, and are allowed to restructure with the BSP on a case-to-case basis.

Rediscounting is a privilege of a qualified bank to obtain loans or advances from the BSP using the eligible papers of its borrowers as collaterals.

Note that in the past, the Monetary Board has also granted similar temporary regulatory relief to banks in areas affected by  typhoons Mina and Juaning.

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