BSP proposes new rules on seized collateral

The Bangko Sentral ng Pilipinas (BSP) has proposed new rules to guide banks and other financial institutions on when they can officially record personal properties taken from borrowers who fail to pay their loans.

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In a draft circular, the BSP proposed amendments to the Manual of Regulations for Banks and Non-Bank Financial Institutions to incorporate the timing of booking personal properties obtained by enforcing a “security interest” under Republic Act 11057, or the Personal Property Security Act (PPSA).

The law, which took effect in 2019, provides a unified legal framework for using personal property such as equipment, inventory or intellectual property as collateral for loans.

The central bank said the proposed amendments would help financial institutions align their accounting practices with the PPSA by formally recognizing enforcement of security interests as a mode of asset acquisition.