PDIC indefinitely extends loan incentive program for closed banks’ borrowers

THE PHILIPPINE Deposit Insurance Corp. (PDIC) has indefinitely extended its Closed Bank Loan Incentive Program (CLIP) and simplified the initiative’s mechanics to make it more accessible to borrowers seeking relief.

The program, which is now called CLIP 4.0, borrowers of closed banks with total outstanding principal balances of up to P10 million may qualify for several incentives if they settle their payments in full and via cash. These incentives will be available to all closed banks regardless of the date of closure and will be determined solely by loan type and status.

PDIC said this ensures “greater transparency, consistency, and ease of implementation.”

For loans secured by real estate mortgage (REM), the interest rate on unbooked interest has now been standardized at 3% per year from variable rates of 3% to 5% previously that depended on bank closure date, age and status of the loan.

“This change offers borrowers more predictable and affordable settlement terms.”

The 50% discount on outstanding principal and booked interest, penalties and other charges for borrowers with clean loans or loans secured by chattel mortgage or pledge will also be retained. All borrowers, regardless of loan type, will also continue to get full waivers on unbooked penalties and other applicable charges.

“With the latest enhancements, the PDIC hopes to expand the program’s reach and encourage more availments,” the state deposit insurer said.

“By simplifying the rules and further enhancing the incentives and indefinitely extending the program, the PDIC reinforces its commitment to providing meaningful financial relief, enabling borrowers of closed banks to resolve their obligations more efficiently and move forward with renewed financial stability.”

CLIP was launched in 2021 to help borrowers settle their loan obligations in closed banks, letting them preserve their credit standing and avoid the foreclosure of their mortgaged assets.

PDIC, as receiver of closed banks, collects loan payments from borrowers of these lenders, which are used to help fund creditors’ claims. “By sustaining this incentive program, the corporation ensures faster and more efficient loan collections and optimized recovery for creditors.” — A.M.C. Sy