Metro Manila (CNN Philippines, February 17) — President Rodrigo Duterte has signed the Financial Institutions Strategic Transfer bill into law, a measure which allows banks to sell bad loans to asset management companies, Bangko Sentral ng Pilipinas Governor Benjamin Diokno said late Tuesday.
Under Republic Act 11523 or the FIST Act, covered corporations will now be allowed to engage third parties to manage, operate, collect, and dispose of non-performing assets acquired from a financial institution.
The measure is seen as an improved version of the Special Purpose Vehicle Act of 2002, which was enacted in response to the Asian financial crisis. It now covers lending companies and other institutions licensed by the Bangko Sentral ng Pilipinas to perform as credit-granting companies.
One-person corporations and government financial institutions are prohibited from setting up their own FIST corporations.
"That’s great news! FIST law will allow banks to easily dispose bad assets through Asset Management Companies," Bangko Sentral ng Pilipinas Governor Benjamin Diokno said in a tweet on Tuesday evening. "The new law will help keep the banking system stable despite the effects of the COVID-19 pandemic."
PRESIDENT DUTERTE SIGNS FIST BILL INTO LAW
That’s great news! FIST law will allow banks to easily dispose bad assets through Asset Management Companies. The new law will help keep the banking system stable despite the effects of the COVID-19 pandemic.
— Benjamin Diokno (@GovBenDiokno) February 16, 2021
"FIST is expected to reduce the NPL ratio by about 0.63 to 7.0 percentage point," he added, referring to nonperforming loans.
Diokno said the draft Implementing Rules and Regulations of the measure is already with the Securities and Exchange Commission as the lead agency, with additional inputs from the BSP.
The FIST Act will take effect immediately after it is published in the Official Gazette and a newspaper of general circulation. Congress ratified the bicameral conference committee report on Senate Bill 1849 and House Bill 6816 in December 2020 after Duterte certified the measure as urgent due to the pandemic.
By CNN Philippines Staff
Source: CNN Philippines
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