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HomeCOMMUNITY BULLETININ FULL | Implementation of Mandatory Grace Period for All Loans Pursuant...

IN FULL | Implementation of Mandatory Grace Period for All Loans Pursuant to Bayanihan to Recover as One Act

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EDITORS NOTE: The following is an important advisory from Clyde Linaja-Padilla, information officer of the Securities and Exchange Commission’s Bacolod Extension Office. DNX is printing it in full.

On September 15, 2020 Republic Act No. 11494, otherwise known as the Bayanihan to Recover as One Act took effect. This law covers entities such as banks, quasi-banks, financing companies, lending companies, microfinance-NGOs and other financial institutions to mention a few.

They are required to implement a one-time 60-day grace period for all loans that are existing, current and outstanding, falling due or any part thereof on or before December 31, 2020.

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The mandatory one-time 60-day grace period shall apply to each loan, whether the borrower has a single loan or multiple loans with the subject financing company, lending company, and microfinance- NGO.

FCs, LCs, and MF-NGOs shall not charge or apply interest over interest, penalties, fees, or other charges during the mandatory one-time 60-day grace period to future payments or amortizations of the borrowers. Furthermore, FCs, LCs, and MF-NGOs are prohibited from requiring their clients to waive the application of the provisions of the Bayanihan to Recover as One Act. No waiver previously executed by borrowers covering payments falling due until December 31, 2020 shall be valid.

The accrued interest for the one-time 60-day grace period may be paid by the borrower on a staggered basis until December 31, 2020. Nonetheless, this shall not preclude the borrower from paying the accrued interest in full on the due date.

However, parties may agree on a grace period longer than 60 days, and/or the payment of accrued interest on a staggered basis even beyond December 31, 2020.

On the other hand, lending companies, financing companies, microfinance companies are advised to observe the law as the Securities and Exchange Commission- Bacolod Extension office had several occasions to receive complaints coming from the public of alleged non-observance of the mandates of the law. Further, they are highly encouraged to constantly visit the SEC website, www.sec.gov.ph and check the Madalas Itanong section (FAQs) in relation to the implementation of the BARO and other relevant laws.

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Lastly, FCs, LCs, and Microfinance companies in Bacolod are further advised that SEC-Bacolod will conduct an ocular inspection of their respective principal and branch offices this November 2020. This will be the first of the many inspections that will be conducted by SEC Bacolod to update our database on the addresses of the companies.

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DNX News Desk
Pioneer digital-first news and information source based in Bacolod City, Negros Occidental province. We are committed to providing high-quality journalism to our audience.

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