The Senate approved on third and final reading Tuesday, Nov. 10, the proposed Financial Institutions Strategic Transfer or the FIST Act.
Senate Bill No. 1849 quickly hurdled the Upper Chamber with 18 affirmative votes from senators, and no negative votes or abstention.
The bill was certified as urgent by President Duterte as part of the government’s COVID-19 recovery measures.
lt would allow banks and other financial institutions to offload their non-performing loans and assets in anticipation of its increase following the pandemic.
Government economic managers said this would help the banks free up money and capital to extend more credit, especially to small businesses.
No senator interpellated on the proposed law as Senate Minority Leader Franklin Drilon noted that its contents entirely reflected the position of concerned stakeholders who were supportive of it.
“[This is a] very important measure given the fact that just today, we received the news of the further contraction of our economy by 11.5 percent for the third quarter, which makes recovery more difficult, and therefore we would expect the need of the banking sector for assistance,” Drilon said, lauding Sen. Grace Poe for sheperding the bill.
Senator Grace Poe, chairperson of the Senate banks committee, thanked her colleagues for backing the measure.
“This is important for our economy and for the businesses and for our banks to maintain a healthy financial situation in our country… I’m very confident about this bill because this has been scrutinized by the experts among our colleagues, Senator Drilon and Sen. Ralph Recto for their guidance,” Poe said following the third reading approval of the bill.
Under the bill, institutions covered under the Special Purpose Vehicle Act of 2002 would be expanded to include lending companies and other institutions licensed by the Bangko Sentral ng Pilipinas, as well as insurance companies, to perform credit-granting companies.
The sales and transfers shall be contained in a database to be submitted by FIST corporations to regulatory agencies monthly for proper monitoring and assessment of the impact of incentives availment.
Poe earlier said that to prevent the abuse of the system, one-person corporations would be prohibited to set up their own FIST corporations, as well as government financial institutions.
Foreign participation in foreclosure sales of lands is removed and the Securities and Exchange Commission and the Department of Justice are given the authority to investigate possible violations of the Anti-Dummy Law.
Applications shall be extended to 36 months for non-performing assets as of Dec. 31, 2021 to give financial institutions enough time to assess the need to offload bad assets, Poe said.
She said consent of the borrowers would also not be required anymore “for clarity and to avoid any further litigation,” although the rights of borrowers under existing laws shall not be impaired or diminished.
There shall be a two-year and a five-year entitlement period for availment of fiscal incentives for all transfers from the financial institutions to FIST corporations and from FIST corporations to a third party, respectively.
If signed into law, Poe said violators could be penalized with the suspension or revocation of the approved FIST Corp. Plan, a fine of P10,000 to P1 million plus P2,000 for every day of violation. Administrative sanctions under applicable laws shall also apply, she said.
Following its approval in the Senate, the bill would be taken up in the bicameral conference committee to come up with a final version to be ratified by both houses of Congress