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Senate approves on final reading FIST bill to cushion banks from bad loans

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Katrina Domingo, ABS-CBN News

<div class="embed-wrap"><figure data-feedback="fb:likes,fb:comments"><img src="https://sa.kapamilya.com/absnews/abscbnnews/media/2020/news/09/22/20200910-san-juan-covid-sap-disbursement-md-9360.jpg"/><figcaption>San Juan City residents line up to receive their second tranche of financial aid under the social amelioration program through ATM machines on September 10, 2020. Mark Demayo, ABS-CBN News/file</figcaption></figure></div>MANILA - The Senate on Tuesday unanimously passed on final reading the Financial Institutions Strategic Transfer (FIST) Act bill to cushion banks from the possible build up of bad loans due to the COVID-19 crisis.The proposed measure, which President Rodrigo Duterte certified as urgent, &quot;will set up mechanisms allowing banks and other financial institutions to dispose and transfer non-performing assets and loans.&quot;&quot;This is important for our economy, for businesses, and for our banks to maintain a healthy financial situation in our country,&quot; said Senate Committee on Banks, Financial Institutions and Currencies chair Grace Poe, who sponsored the measure in plenary.&quot;I am very confident about this bill because this has been scrutinized by experts,&quot; she said.Senate Minority Leader Franklin Drilon said the passage of the bill is timely after government confirmed that the Philippine economy contracted by 11.5 percent in the third quarter of 2020 due to constraints brought by the pandemic.&quot;This bill is precisely deigned for that, in anticipation of the difficulties that our banking sector will encounter as a result of the pandemic,&quot; Drilon said.&quot;We would expect the need of the banking sector for assistance in terms of being able to maintain a healthy financial sector,&quot; he said.<ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/11/10/20/philippine-economy-shrinks-115-pct-in-q3-second-worst-quarterly-contraction-on-record">Philippine economy shrinks 11.5 pct in third quarter, but &#x27;worst is over&#x27; says NEDA</a></li></ul>The measure exempts all non-performing assets sold to FIST corporations from documentary stamp tax, capital gains tax, creditable withholding income taxes, and value-added tax.While the government is expected to lose between P3.3 and P13.2 billion for 5 years after the FIST Act&#x27;s implementation, the Bangko Sentral ng Pilipinas (BSP) backed the bill, saying that it is important for banks to minimize, if not remove, non-performing assets from their balance sheets.The FIST Act would help &quot;encourage the sale of non-performing assets,&quot; which will allow banks and Filipinos to stay liquid during the global pandemic, Bangko Sentral Managing Director Lyn Javier said in an earlier hearing in the Senate.&quot;If we keep the non-performing assets in the balance sheets of banks, it will eat up a significant amount of capital as well,&quot; she said.&quot;This would constrain them from lending to other sectors of the economy.&quot;Foreign businesses also look at the non-performing ratio of countries when choosing where to invest, she said.The Philippines&#x27; non-performing ratio is at 2.5 percent, close to the higher end of the 1.3 to 2.6 percent rate in Southeast Asia, according to data from the BSP.<ul class="op-related-articles">	<li><a href="https://news.abs-cbn.com/business/08/26/20/govt-may-lose-up-to-p132b-in-5-years-if-congress-oks-fist-national-treasurer">Gov&#x27;t may lose up to P13.2B in 5 years if Congress OKs FIST: National Treasurer</a></li></ul>

The Senate on Tuesday unanimously passed on final reading the Financial Institutions Strategic Transfer (FIST) Act bill to cushion banks from the possible build up of bad loans due to the COVID-19 crisis.

The Senate on Tuesday unanimously passed on final reading the Financial Institutions Strategic Transfer (FIST) Act bill to cushion banks from the possible build up of bad loans due to the COVID-19 crisis.

Senate approves on final reading FIST bill to cushion banks from bad loans

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Senate approves on final reading FIST bill to cushion banks from bad loans

Katrina Domingo,

ABS-CBN News

Published Nov 10, 2020 07:33 PM PHT

Read More:

ANC

Senate

FIST

Financial Institutions Strategic Transfer

pandemic

pandemic economy

economic crisis

health and economic crises

COVID-19

loans

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