By Lee C. Chipongian
When they deem it is time, the Bangko Sentral ng Pilipinas (BSP) will be prudent in taking back the regulatory relief measures they have extended to banks to cope with the adverse impact of the COVID-19 pandemic on their operations and bottomlines.
“We will carefully manage the winding down of the regulatory relief measures,” according to BSP Governor Benjamin E. Diokno, and this will be based on a thorough review of how the health crisis and resulting lockdown and containment measures affected not just banks but all of the BSP supervised financial institutions.
“Proper timing for the unwinding of relief will help protect banks throughout the economic recovery phase and give them flexibility to extend more loans to the vulnerable sectors, which are much needed to speed up the country’s bounce-back process,” said Diokno in a Bloomberg-sponsored roundtable discussion.
The BSP chief said they will conduct a “comprehensive assessment” for a “data-driven, evidence-based policy on winding down and its timing.”
“We must also start planning for the post-pandemic life ahead of us,” said Diokno, reiterating his “New Economy” goal. “As we advance from the current ‘crisis’ to the ‘New Economy’ state, we need urgent reforms in the areas of public health, social protection, disaster response, and countryside development. Reinforcing all these reforms is the digital imperative.”
Primarily, his vision of the “New Economy” is dependent on the country’s development of the ICT infrastructure and in investing in people skills.
“As far as the BSP is concerned, we will do our part the best way we can,” he said, and it begins with the winding down of the relief measures but the timing or when this will be done is crucial.
The BSP has laid down a regulatory environment where digitalization is a must. The three-month community quarantine has helped in widening awareness of the necessary of digitalization.
The BSP’s framework for this is the interoperable PESONet and InstaPay for digital payments, the National QR Code Standard and the Government e-Payments Facility or e-GovPay.
As regulatory relief measures are gradually removed, Diokno is hoping that Congress will soon enact the Financial Institutions Strategic Transfer (FIST) bill to assist banks suddenly saddled with soured assets because of the pandemic.
He is also hoping for the changes or amendments to the BSP Charter to “better detect and address conglomerate risk among supervised institutions” and also a “law on recovery and resolution planning for banks that are aligned with international standards.”
Diokno said banks’ support to achieve the “New Economy” is “crucial. “For banks, make use of the regulatory relief measures offered by the BSP by effectively fulfilling your financial intermediation role by offering and communicating the least burdensome options to your clients, especially MSMEs.
Lending to the vulnerable sectors, led by MSMEs, will go a long way in helping speed up the economy’s recovery,” he said.