President Rodrigo Duterte has signed the Financial Institutions Strategic Transfer (FIST) Act, a measure that seeks to help financial institutions like banks offload soured loans so banks can be more liquid and thus more capable of providing a flow of credit to businesses.
Malacañang announced this on Wednesday, February 17. It is yet to release a copy of Republic Act No. 11523.
Presidential Spokesperson Harry Roque said in a mix of Filipino and English over PTV that the law recognizes the "important role of banks and financial institutions" in the country's economic recovery amid the pandemic.
The FIST bill will allow all financial institutions to offload non-performing assets, including non-performing loans, to FIST corporations. It will cover banks and other lending companies licensed by the Bangko Sentral ng Pilipinas.
Lawmakers and Finance Secretary Carlos Dominguez III, who has long lobbied for the measure, hope that helping banks this way will allow the banks to provide credit to Philippine businesses, or micro, small, and medium enterprises (MSMEs) that are considered the backbone of the economy.
“When we get to the bottom of it, this law’s primary objective is really to keep the banking sector above water during this crisis. Before the banks can help MSMEs, we must help the banks first,” said Senator Grace Poe, who had sponsored the Senate version of the bill.
Poe said in a statement on Wednesday that the FIST law is "designed for tough times, and we are glad it is now institutionalized into our financial system."
"At the heart of this law are the people and their jobs and livelihood which we aim to protect amid the pandemic-induced economic crunch," she said.
"Giving banks and financial institutions a lifeline will mean more credit access for businesses, preservation of jobs and even generation of new ones as economic activities continue. Jobs are crucial to productivity and the rebound of the economy," the senator added.
The FIST law is estimated free up P1.19 trillion worth of loans from the sale of non-performing assets which would then help around 600,000 MSMEs and save more than 3.5 million jobs, according to the National Economic and Development Authority.
Duterte certified the measure as urgent last October 2020. It is one of several measures meant to tide the country over the COVID-19 crisis, which has crippled many businesses and slashed millions of jobs. – Rappler.com
Pia Ranada covers the Office of the President and Bangsamoro regional issues for Rappler. While helping out with desk duties, she also watches the environment sector and the local government of Quezon City. For tips or story suggestions, you can reach her at email@example.com.