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SONA 2020: Duterte backs bill allowing banks to dispose of bad loans

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ABS-CBN News

MANILA - President Rodrigo Duterte on Monday called on lawmakers to pass a bill allowing banks to dispose of bad loans by transferring them to asset management companies. In his 5th State of the Nation Address, Duterte called for the passage of the Financial Institutions Strategic Transfer (FIRST) Act authored by Sen. Imee Marcos. The proposal, Duterte said, will “allow banks to dispose of and transfer non-performing assets and non-performing loans (NPL) to asset management companies similar to special purpose vehicles.”The measure is meant to ensure that banks remain liquid in times of crisis such as the COVID-19 pandemic.The number of bad loans, or borrowings which are unlikely to be repaid or repaid on time, is expected to rise as many businesses shut down or scale down their operations due to the COVID-19 crisis. <ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/04/23/20/bpi-raises-provision-for-bad-loans-due-to-covid-19-q1-net-income-falls">BPI raises provision for bad loans due to COVID-19, Q1 net income falls</a></li>	<li><a href="https://news.abs-cbn.com/business/07/27/20/bdo-nets-lower-h1-profit-on-provisioning-for-potential-delinquencies">BDO nets lower H1 profit on provisioning for potential delinquencies</a></li>	<li><a href="https://news.abs-cbn.com/business/02/26/20/asian-banks-brace-for-bad-loans-spike-as-virus-batters-regions-economies">Asian banks brace for bad loans spike as virus batters region&#x27;s economies</a></li></ul>The Bangko Sentral ng Pilipinas earlier reported that the COVID-19 pandemic could push the amount of bad loans shouldered by banks to P556.6 billion this year, equivalent to 5 percent in NPL ratio. BSP Governor Benjamin Diokno however said that Philippine banks <a href="https://news.abs-cbn.com/business/05/07/20/bsp-says-philippine-banks-can-withstand-increase-in-bad-loans-caused-by-pandemic" target="_blank">can withstand</a> this as they are well-capitalized.

President Rodrigo Duterte on Monday called on lawmakers to pass a bill allowing banks to dispose of bad loans by transferring them to asset management companies.

President Rodrigo Duterte on Monday called on lawmakers to pass a bill allowing banks to dispose of bad loans by transferring them to asset management companies.