Kim Ryan R.

Advincula
FinM 6 - F

 Enumerate and define different costs of credits that are waived during the grace
period.

Pursuant to the provisions of Section 4(aa) of Republic Act No. 11469, or the Bayanihan
to Heal as One Act, it provides that all covered loans with maturity date of the principal
and/or interest, including amortizations, within the ECQ Period shall be given a mandatory
thirty (30)-day grace period, without incurring

(1) Interest on interest/ Compound Interest – is the interest charged on unpaid

interest; it is earned not only on initial principal, but also on accumulated
interest from previous periods.
(2) Penalties, fees and other charges – any amounts collected from the
borrower that represent default charges, penalty charges; such as a late fee
- fees charged due to the delay of payment.

 Define accrued interest. Give the reason why this cost was not waived.

Accrued interest is the accumulated interest on your loan that the lender has charged but that
hasn't been paid.

In the context of the Philippines, accrued interest are those interest that was accumulated
during the 3-month grace period, which will needed to be paid either in lump sum or
staggering option. These are the following reasons why accrued interest should not be
waived:

First, it must be noted that interest is the primary income generator of banks through
loans, if it is to be waived, banks will not have an income, hence, they are just letting people
borrow money for free, considering that those money has its corresponding cost and risk.

Second, it should not be waived since the banks primary source of money is through the
client’s deposits, during the 3-month grace period the banks are still paying interest on those
deposits, incurring them interest expense. Therefore, the money borrowed entails cost for the
bank.

Third, the liquidity of the bank will be affected; they will have a hard-time converting
and generating cash for sudden withdrawals, considering the state of the economy during the
pandemic.
Kim Ryan R. Advincula
FinM 6 - F

Lastly, the lender is bound to pay the interest of the loan, furthermore it is not stipulated
on the Section 4(aa) of Republic Act No. 11469, that interest are to be waived but what are
provided is a grace period or extension on the payment of the loan, and what are waived is
only interest on interest, penalty, fees and other charges.

 Based on your observations and research, discuss the effect of Bayanihan to Heal as
One Act to the Philippine economy today.

The Bayanihan to Heal as One Act provided necessary provisions needed to safeguard
the people of the Philippines against the further transmission of the virus and to properly
mitigate the severity of the situation in the country due to the pandemic. With this, entails
the mandatory closure of airports, seaports, land travelling transportations in some parts
of the country; it also stipulated the immediate closure of all business/enterprises be it
small, medium and large, except for those industries that is deemed to be essential like
utility companies, banks, other government sectors, etc. provided to utilize skeletal
schedule. These are the effects of R.A 14469 to the Philippine economy:

 Economic contractions, due to the economic shock provided by the severe

disruptions in manufacturing, agriculture, tourism and hospitality, construction,
and trade.
 Economic decline which is caused by reduced consumer confidence, decrease in
investments, increase in unemployment and low supply and demand, and lastly
increase in national debt.
 Deterring growth prospect of the Philippines which is expected to halt for a long-
period of time.