Poe: FIST bill can generate P1.19T worth of loans for 600K MSMEs

With the passage of the Financial Institutions Strategic Transfer Act (FIST) on third reading on Tuesday, Senator Grace Poe expressed hope that banks will be encouraged to lend to businesses and consumers to fuel the Philippine economy and pull it out of a recession.

“This is a proactive response to the pandemic that should free up P1.19 trillion worth of loans and allow banks to lend to some 600,000 MSMEs and save over 3.5 million jobs,” said Poe, chair of the Senate committee on banks, financial institutions and currencies.

The Senate passed the FIST bill on third and final reading in a 118-0 vote on Tuesday.

Poe said the Covid-19 pandemic dealt an unprecented blow to Filipinos, with millions losing their livelihood and businesses closing shop.

With the economy shrinking by another 11.5 percent in the third quarter, FIST should make it easier for banks to unload bad assets and free up funds for lending that would have otherwise been tied up for provisioning, Poe said.

The FIST Act draws from the lessons of the Asian Financial Crisis of 1997/1998 and the Special Purpose Vehicle (SPV) Act that was hoped to achieve the same goal as the FIST but was enacted into law several years later in 2002.

“This is a much-improved version of the SPV. The FIST does away with the requirements that delayed the transfer of assets without diminishing the rights of borrowers under existing laws,” said Poe, author and sponsor of FIST.

The FIST Act allows banks and other financial institutions to sell nonperforming assets to FIST corporations.

Asset sales and transfers will be monitored by regulators monthly to allow policy makers to review the impact of the incentives.

Unlike the SPV law, government financial institutions will not be allowed to set up its own FIST corporation so that limited government resources can be used for more productive endeavors.

Nonperforming assets that will be allowed for sale or transfer to FIST companies will include those that have become nonperforming before Dec. 31, 2022 to allow financial institutions to harness the full benefits of the law as some loans could still turn sour in the coming months because the country is still in a recession.

“This law is complete in itself and can be implemented on its own even without implementing rules and regulations. This law is not vague and we hope to have done away with the need for an IRR that has been blamed for delays in the implementation of other laws,” Poe said.

Source: Latest Politics News Today (Politics.com.ph)