Banks launch restructuring of P167-B credit card receivables

By Lawrence Agcaoili (The Philippine Star), June 9, 2016, http://www.philstar.com/business/2016/06/09/1590979/banks-launch-restructuring-p167-b-credit-card-receivables

MANILA, Philippines – Major banks are hoping to restructure a “big chunk” of the P167.4 billion credit card receivables through a debt relief program for highly indebted and financially distressed customers.

Credit Card Association of the Philippines (CCAP) president Jesus Angelo Gomez said in a round table discussion that banks hope to migrate a major chunk of the credit card receivables to the Inter-Bank Debt relief Program (IDRP).

Gomez said only 1.39 percent or P2.32 billion of the total credit card receivables have been placed in individual restructuring programs of banks. The receivable have interest rates ranging between zero and three percent with an average tenor of 48 months.

As of end-2015, the total non-performing credit card receivables amounted to P14.5 billion or 6.54 percent of the total receivables.

Gomez said the IDRP was developed to help well meaning customers get back on track toward responsible credit use.

Under the program, the repayment period could be extended to as long as 10 years for severe cases of indebtedness, while interest rates would only be 1.5 percent per month or even lower depending on the profile of the customer, debt to income ratio, and completion of documents required.

The CCAP said any of the 16 participating banks would disapprove application for customers who misused and abused the credit facility granted by the banks.

Likewise, all existing credit cards of customer who would avail of the program would be blocked or cancelled upon enrollment and all rebates and rewards earned would be forfeited.