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CDA eyes possible loan moratorium
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Posted on Oct 27 2006
The Commonwealth Development Authority is considering putting a moratorium on loans to solidify its standing amid a significant number of delinquent loans.
CDA board chair Vincent Calvo has, however, expressed reservation on the matter.
“That’s only one of the options. The board has not taken any action on that. There’s no consensus on that. As much as possible, we want to help our local investors to start up business,” said Calvo.
He said the board is more inclined to approve the proposal to lower the interest rates for borrowers.
Calvo said reducing the loan rates would definitely help CDA clients “to survive this current economic crisis.”
The CDA currently imposes a 7 percent interest rate for commercial loans and 4.5 percent for agricultural loans.
Meantime, Calvo said that the CDA loan delinquency rate is now between 60 to 65 percent, which he said is bit better than previous years. In 2004, the CDA cited an 80-percent delinquency rate.
As of June this year, CDA acting executive director and loan manager Oscar Babauta said there were a total of 216 borrowers, with 131 of them considered delinquent borrowers. These delinquent loans amount to $13.7 million. About 80 percent of the delinquent cases have been referred to court litigation.
Delinquent loans refer to debts that are not paid for 30 days to years.
Calvo said CDA has been working closely with these borrowers to bring them back on track. “Many of them are willing to settle their accounts. They are coming to us,” he said.
He said CDA understands that all its borrowers are considered high-risk borrowers.
A top requirement of the CDA is for loan applicants to have been declined three times by commercial banks.
“That gives an idea of how risky is our transaction with them,” he said.
The issue on loan interest reduction will be discussed at length during the board’s meeting next week.
