The Philippine Deposit Insurance Corporation has officially declared the indefinite continuation and significant simplification of its Closed Bank Loan Incentive Program, now rebranded as Clip 4.0. This strategic move is designed to deliver faster, clearer, and more accessible relief to borrowers of closed banks, with the updated program taking effect from January 1, 2026.
Enhancing Financial Support for Borrowers
First introduced in 2021, Clip has served as a cornerstone of the PDIC's initiatives to assist affected borrowers in settling long-standing loan obligations in closed banks. The program aims to help individuals preserve their credit standing and avoid the foreclosure of mortgaged assets. With the latest enhancements under Clip 4.0, the PDIC seeks to expand the program's reach and encourage more borrowers to take advantage of these benefits.
Simplified Eligibility and Incentives
Under the streamlined Clip 4.0, borrowers of closed banks with total outstanding principal balances of up to P10 million may qualify for a range of incentives, provided they make payment through a one-time cash settlement. Notably, the incentives will now apply to all closed banks, regardless of the date of closure. This change ensures greater transparency, consistency, and ease of implementation, as incentives are determined solely by loan type and status.
Key Improvements in Loan Terms
One of the most significant improvements in Clip 4.0 applies to loans secured by real estate mortgages. The interest rate on unbooked interest has been standardized at three percent per annum, replacing the earlier variable rates of three percent to five percent that depended on factors such as the bank closure date, loan age, and loan status. This adjustment offers borrowers more predictable and affordable settlement terms, enhancing financial planning.
Clip 4.0 also retains the 50 percent discount on outstanding principal and booked interest, penalties, and other charges for borrowers with clean loans or loans secured by a chattel mortgage or pledge. Additionally, all borrowers, irrespective of loan type, continue to benefit from full waivers on unbooked penalties and other applicable charges, further reducing their financial burden.
Commitment to Financial Stability
By simplifying the rules, enhancing incentives, and indefinitely extending the program, the PDIC reinforces its commitment to providing meaningful financial relief. This initiative enables borrowers of closed banks to resolve their obligations more efficiently and move forward with renewed financial stability.
As the statutory receiver of closed banks, the PDIC collects loan payments from borrowers to augment the liquid funds earmarked for settling creditors' claims. By sustaining this incentive program, the corporation ensures faster and more efficient loan collections, optimizing recovery for creditors and supporting the broader financial system.
