With the impact of Covid 19, the Bangko Sentral ng Pilipinas (BSP) has deferred the implementation of a stricter examination of banks‘ compliance in mitigating business risks.

In accordance with Monetary Board Resolution No. 792 dated 25 June 2020, the timeline for the adoption of the Supervisory Assessment Framework (SAFr) has been revised from 1 July 2020 to 1 January 2021.

SAFr is a more forward-looking compliance rating system in assessing the compliance of banks and other financial institutions in mitigating business risk and flag banks that are at risk due to sub-par activities.

The proposed framework was set to replace the CAMELS (capital adequacy, asset quality, management earnings, liquidity, and sensitivity to market risk) implemented in 2013.

The MB resolution was cited by BSP deputy governor Chuchi Fonacier in deferring the implementation of the SAFr which mandates the central bank to examine the books of a bank depending on the need to assure there are no bank failures.

A banker told The Financial District (TFD) that the deferment is a way for the BSP to look kindly at the loan portfolios of the banking system which suffered due to the virulent Covid 19 that has led to a devastation of the economic landscape that has upped the non-performing loans or NPLs, a key ingredient in looking at the health of a bank.

The banker cited the offloading for $50 million of the NPLs of an unnamed bank to a Sweden-based buyer of NPLs in Asia recently to the big hit of banks on their balance sheets as many borrowers were hard pressed paying their monthly amortizations especially on credit card receivables and motor loans with NPLs said to be upward of P2 billion.