By Chino Leyco
The Department of Finance (DOF) released the implementing rules and regulations (IRR) governing the mandatory grace period for all loan payment dues falling within the enhanced community quarantine (ECQ) period.
Based on the IRR signed by Finance Secretary Carlos G. Dominguez III, both government and private lending institutions in the country are required to implement a 30-day grace period for all loans with principal and interest falling due on March 16 to April 15 this year.
According to the IRR of Republic Act No. 11469 or the “Bayanihan to Heal as One Act,” lenders cannot impose interest on interest, penalties, fees and other charges during the ECQ period.
Covered financial institutions include banks, quasi-banks, non-stock savings and loan associations, credit card issuers, pawnshops as well as other credit granting financial companies.
“All covered institutions shall not charge or apply interest… to the future payments/amortization of the individuals, households, micro, small and medium enterprises (MSMEs), and corporate borrowers,” the IRR read.
It also stated that the grace period shall “automatically” be extended if President Duterte decides to expand the ECQ period beyond April 15.
Likewise, the rules added that no additional documentary stamp tax (DST) shall be imposed by lending institutions to comply with the government’s mandatory grace period order.
“Further, no DST shall be imposed on credit extension and credit restructuring, micro-lending including those obtained from pawnshops and extension thereof during the ECQ period,” the document read.
The IRR also clarified that the accrued interest for the 30-day grace period may be paid by the borrower on staggered basis over the remaining life of the loan, but will not preclude the person from paying in full after ECQ.
“Violation of the provisions of these rules shall be subject to the appropriate penalties set for in the Bayanihan to Heal as One Act, as all as existing laws, rules and regulations,” the IRR said.