BSP OKs new regulatory relief for savings and loan associations

THE BANGKO Sentral ng Pilipinas (BSP) will allow non-stock savings and loan associations (NSSLAs) to include accrued interest on some loans in their 2020 net profit, for the purpose of income distribution to members, as a way to extend relief to the industry during the pandemic.

Memorandum No. M-2020-088 signed by BSP Deputy Governor Chuchi G. Fonacier on Dec. 9 said the Monetary Board will allow NSSLAs to recognize as income their accrued interest on members’ unclassified loans outstanding from Sept. 15 to Dec. 31, net of general allowance for credit losses (ACL) of one percent of outstanding accrued interest receivable.

The period falls under the one-time 60-day loan moratorium provided by Republic Act No. 11494 or the Bayanihan to Recover as One Act.

In order be eligible, the Board of Trustees of an NSSLA should submit a certification of accuracy and integrity of income recognition that will be verified by the BSP in their next on-site examination.

Likewise, availing the measure will only be allowed if the distribution of accrued interest income net of ACL will not result in insufficiency of funds, borrowing to finance the net income distribution, restricted lending activities, or liquidity issues.

NSSLAs should also have no deficiency in ACL on loans and other risk assets, based on its latest approved report of examination.

NSSLAs interested to avail of the relief measure can submit the necessary requirements to the BSP’s Financial Supervision Department until Dec. 31.

NSSLAs gather deposits from their members which are then utilized to disburse loans meant to finance personal and home building expenses exclusive for military and uniformed personnel, teachers, employees, and market vendors, among others.

Cumulatively, these non-stock corporations service 1.4 million members across the country.

BSP Governor Benjamin E. Diokno has said they expect NSSLAs to exhibit sustained profitability and a stable performance despite headwinds caused by the coronavirus pandemic.

In August, the central bank issued tighter measures for “complex” NSSLAs or those with total assets of at least P5 billion.

The NSSLA industry’s assets stood at P260.2 billion as of end-2019, climbing by 19.9% from the end-2018 level of P226.4 billion. A huge chunk or about P205.5 billion of their assets are loans. — LWTN

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