SEC Warns Lenders Refusing to Comply with Grace Period on Loans During ECQ
April 17, 2020 – The Philippines Securities and Exchange Commission said it received complaints and reports of lenders and financing companies that are refusing to comply with the provisions of the Bayanihan to Heal as One Act. The Commission warned that violators will be dealt with to the full extent of the law.
Specifically, this refers to the application of the Mandatory Grace Period for the payment of loans. Covered institutions, including lenders and financing companies, must implement a 30-day grace period for all loans with principal and/or interest falling due within the ECQ period without interest on interest, fees, and charges during the 30-day grace period to future payments/amortizations of the individuals, households, micro small and medium enterprises (MSMEs), and corporate borrowers.
Financing companies and lenders are also prohibited to require their clients to waive the application of the provisions of the Bayanihan to Heal as One Act. The Implementing Rules and Regulations of this law, as approved by the Department of Finance, said “no waiver previously executed by borrowers covering payments falling due during the ECQ (Enhanced Community Quarantine) period shall be valid.
The 30 day Grace Period shall also be extended if the ECQ period is also extended by the President of the Philippines.
The ECQ period was initially only from March 17 – April 13, 2020. However, President Rodrigo Duterte extended the ECQ period up to April 30, 2020.
The SEC tells the public that it takes every report seriously and that they are already investigating a number of Financing and Lending companies for possible violation. The Commission warned of penalties for non-compliance of the Bayanihan to Heal as One Act as well as other laws being implemented by the Commission.
Read the SEC Advisory here.
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