Philippine thrift banks have backed the Bangko Sentral ng Pilipinas decision to extend salary loan repayment periods to seven years. They caution that the longest terms should apply only to specific expenses.
The Chamber of Thrift Banks expressed support for BSP Circular No. 1239, issued on June 18, which raised the maximum repayment period for salary-based consumption loans from five to seven years. Trustee Manuel Santiago Jr. said the industry welcomes the change for greater flexibility but stressed the need to avoid overburdening borrowers with recurring costs.
Santiago noted at the chamber’s annual convention on July 15 that six- and seven-year terms should not cover all salary loans. He gave the example of tuition fees, which recur yearly, and said longer terms should instead target emergencies such as hospitalization or major one-time expenses like home repairs.
BSP Deputy Governor Lyn Javier said the extension allows banks to assess each borrower’s repayment capacity and restructure loans accordingly. She added that lenders should also offer financial wellness programs beyond simply extending credit.
