CDA MC 2020-18

MC 2020-18
REGULATORY RELIEF
MEASURES FOR
COOPERATIVES WITH
CREDIT OPERATIONS IN
VIEW OF THE COVID-19
PANDEMIC

“REGULATORY RELIEF MEASURES FOR
COOPERATIVES WITH CREDIT OPERATIONS
IN VIEW OF THE COVID-19 PANDEMIC.”
• IN LINE WITH THE MEMORANDUM ISSUED BY THE AUTHORITY ON APRIL 6, 2020,
ENTITLED “COMPLIANCE WITH SECTION 4(AA) OF REPUBLIC ACT NO. 11469,
OTHERWISE KNOWN AS THE BAYANIHAN TO HEAL AS ONE ACT,” THIS
MEMORANDUM CIRCULAR IS HEREBY ISSUED TO PROVIDE REGULATORY
RELIEF MEASURES FOR COOPERATIVES WITH CREDIT OPERATIONS IN VIEW
OF THE COVID-19 PANDEMIC.

COVERAGE:
THIS CIRCULAR COVERS ALL TYPES OF COOPERATIVES WITH CREDIT OPERATIONS,
EXCEPT COOPERATIVE BANKS WHICH SHALL OBSERVE THE REGULATORY RELIEF
MEASURES OF THE BSP.
IN THE LIGHT OF THE PROCLAMATION MADE BY PRESIDENT RODRIGO R. DUTERTE
DECLARING A STATE OF PUBLIC HEALTH EMERGENCY THROUGHOUT THE
PHILIPPINES DUE TO THE OUTBREAK OF COVID-19, AND IN CONSONANCE WITH
SECTION 4(AA) OF RA NO. 11469, THE FOLLOWING REGULATORY RELIEFS MAY BE
GRANTED TO COOPERATIVES ENGAGED IN CREDIT/LENDING SERVICES;
1. EXCLUSION OF THE AMOUNTS OF PAST DUE LOANS DURING THE PERIODS OF ECQ
AND MECQ IN THE COMPUTATION OF ALLOWANCE FOR PROBABLE LOAN LOSSES;
2. STAGGERED BOOKING OF ALLOWANCE FOR PROBABLE LOSSES ON LOANS (APLL) AND
3. USE OF CASH RESTRICTED FOR RESERVE FUND CLASSIFIED UNDER THE ACCOUNT
"OTHER FUNDS AND DEPOSITS"

ART. 3, EXCLUSION OF THE AMOUNTS OF PAST
DUE LOANS DURING THE PERIODS OF ECQ AND
MECQ IN THE COMPUTATION OF ALLOWANCE FOR
PROBABLE LOAN LOSSES
TREATMENT OF LOANS DUE DURING ECQ AND MECQ.
 ANY LOANS WHICH ARE DUE DURING THE ENHANCED COMMUNITY QUARANTINE
(ECQ) AND MODIFIED ENHANCED COMMUNITY QUARANTINE (MECQ) PERIOD SHALL
NOT BE CONSIDERED PAST DUE, THUS, EXCLUDED IN THE COMPUTATION OF
ALLOWANCE FOR PROBABLE LOAN LOSSES. HOWEVER, LOANS CLASSIFIED AS
PAST DUE PRIOR TO MARCH 17, 2020 SHALL STILL BE CLASSIFIED AS PAST DUE IN
THE COMPUTATION OF APLL.

ILLUSTRATION ON THE COMPUTATION OF
PAST DUE LOANS

ILLUSTRATION ON THE COMPUTATION OF
PAST DUE LOANS
1. MEMBER A WAS NOT ABLE TO PAY HIS AMORTIZATIONS FALLING DUE FROM
DECEMBER 30, 2019 AND ALL SUCCEEDING MONTHS.
2. MEMBER B FAILED TO PAY BEGINNING MARCH 1, 2020.
3. MEMBERS C AND D ARE UPDATED IN THEIR LOAN AMORTIZATIONS.
4. E WAS UNABLE TO PAY SINCE NOVEMBER OF 2018.
5. DUE TO THE IMPOSITION OF ECQ AND MECQ, ALL MEMBERS WERE GIVEN A
30-DAY GRACE PERIOD IN THE PAYMENT OF THEIR LOANS.

EXCLUSION OF THE AMOUNTS OF PAST DUE
LOANS DURING THE PERIODS OF ECQ AND MECQ
IN THE COMPUTATION OF ALLOWANCE FOR
PROBABLE LOAN LOSSES
 members A, B and E were already
delinquent in their loan payments
prior to the imposition of ECQ and
MECQ, hence, their accounts are
considered as past due.
 On the other hand, members C
and D became delinquent payers
only at the time of the ECQ and
MECQ, but because of the grace
period given to them, their
accounts will be considered as
current.

ARTICLE IV, STAGGERED BOOKING OF
ALLOWANCE FOR PROBABLE LOSSES ON
LOANS
WHO MAY AVAIL.
1. COOPERATIVES WITH LENDING/CREDIT OPERATIONS ARE ALLOWED TO BOOK
THEIR ALLOWANCE FOR PROBABLE LOSSES ON A STAGGERED BASIS FOR A
MAXIMUM PERIOD OF THREE (3) YEARS.
2. THIS APPLIES TO LOANS WHICH HAVE BEEN PAST DUE FOR 30 TO 365 DAYS,
COMPUTED ON THE BASIS OF PORTFOLIO AT RISK, AS SHOWN BELOW:

STAGGERED BOOKING OF ALLOWANCE FOR
PROBABLE LOSSES ON LOANS
NOTICE TO THE CDA.
IN ORDER TO AVAIL OF THE REGULATORY RELIEF, THE COOPERATIVE SHALL SUBMIT TO
THE CDA REGIONAL OFFICE HAVING JURISDICTION OVER THE PRINCIPAL OFFICE OF THE
COOPERATIVE,
THE FOLLOWING DOCUMENTS, ON OR BEFORE DECEMBER 31, 2020:
1. LETTER INFORMING THE AUTHORITY THAT IT IS AVAILING OF THIS REGULATORY RELIEF,
SIGNED BY THE MANAGER AND/OR THE CHAIRMAN; AND
2. BOARD RESOLUTION RESOLVING TO AVAIL OF THE REGULATORY RELIEF SIGNED BY
THE SECRETARY AND ATTESTED BY THE CHAIRMAN/PRESIDING OFFICER. FOR THIS
PURPOSE, THE MEETING OF THE BOD MAY BE CONDUCTED THROUGH
VIDEOCONFERENCING, TELECONFERENCING, AUDIO CONFERENCING OR A COMBINATION
THEREOF, EVEN IF NOT INCLUDED IN THE BYLAWS OR POLICIES OF THE COOPERATIVE, BUT
SUBJECT TO THE RULES ON SENDING OF NOTICES, QUORUM AND VOTING REQUIREMENTS

ARTICLE V, USE OF CASH RESTRICTED FOR
RESERVE FUND CLASSIFIED UNDER THE
ACCOUNT “OTHER FUNDS AND DEPOSITS”
IN CASE OF LIQUIDITY PROBLEM AS A RESULT OF THE GRANTING OF GRACE
PERIODS AND THE RESTRUCTURING OF LOANS TO MEMBER-BORROWERS,
A COOPERATIVE MAY USE FOR ITS OPERATIONS NOT MORE THAN 50% OF THE
AMOUNT SET ASIDE FOR THE RESERVE FUND, SUBJECT TO THE EVALUATION
AND APPROVAL OF THE AUTHORITY AFTER SUBMISSION OF THE
REQUIREMENTS,
HEREOF: PROVIDED, HOWEVER, THAT THIS FUND MUST BE FULLY REPLENISHED
AS SOON AS THE COOPERATIVE HAS RESOLVED ITS LIQUIDITY PROBLEM OR
WITHIN A PERIOD OF THREE (3) YEARS, WHICHEVER COMES FIRST,
AND PROVIDED, FURTHER, THAT THE RESERVE FUND SHALL BE 100% FUNDED
AT THE TIME OF FILING OF THE APPLICATION TO AVAIL OF THIS RELIEF.

USE OF CASH RESTRICTED FOR RESERVE
FUND CLASSIFIED UNDER THE ACCOUNT
“OTHER FUNDS AND DEPOSITS”
REQUIREMENTS. IN ORDER TO UTILIZE ITS “OTHER FUNDS AND DEPOSITS”, THE
COOPERATIVE SHALL SUBMIT, ON OR BEFORE OCTOBER 31, 2020, THE
FOLLOWING DOCUMENTS:
1. LETTER, SIGNED UNDER OATH BY THE CHAIRPERSON AND/OR THE AUTHORIZED
SIGNATORY OF THE COOPERATIVE, CONTAINING THE FOLLOWING:
a) REQUEST FOR REGULATORY RELIEF TO USE CASH RESTRICTED FOR RESERVE FUND
CLASSIFIED UNDER THE ACCOUNT “OTHER FUNDS AND DEPOSITS”;
b) STATEMENT THAT THE RESERVE FUND IS FULLY FUNDED, INDICATING THE AMOUNT OF
CASH RESTRICTED FOR SUCH FUND;
c) STATEMENT THAT THE LIQUIDITY PROBLEM AROSE DUE TO THE GRANTING OF GRACE
PERIOD OR RESTRUCTURING OF LOANS;

d) AMOUNT OF RESERVE FUND AS OF DECEMBER 31, 2019;
e) REQUESTED AMOUNT TO BE TAKEN FROM THE “OTHER FUNDS AND DEPOSITS” SET
ASIDE FOR THE RESERVE FUND AND THE PURPOSE FOR WHICH THE FUND WILL BE
USED;
f) STATEMENT THAT THE COOPERATIVE HAS NO SHORT-TERM INVESTMENTS/DEPOSITS
FROM ANY BANKS, COOPERATIVE FEDERATIONS AND OTHER FINANCIAL INSTITUTIONS;
g) STATEMENT THAT THE COOPERATIVE SHALL REPLENISH IT AS SOON AS ITS LIQUIDITY
PROBLEM HAS BEEN RESOLVED OR WITHIN A PERIOD OF THREE (3) YEARS,
WHICHEVER COMES FIRST; AND
h) STATEMENT THAT THE COOPERATIVE SHALL SUBMIT A CERTIFICATE OF

2. 2019 AUDITED FINANCIAL STATEMENTS AND INTERIM FINANCIAL STATEMENTS FOR
THE MONTH PRIOR TO THE DATE OF APPLICATION; AND
3. BOARD RESOLUTION ON THE AVAILMENT OF THE RELIEF.

PROCEDURE.
1. THE COOPERATIVE SHALL SUBMIT THE REQUIREMENTS TO THE CDA
CENTRAL/REGIONAL OFFICE WHICH HAS JURISDICTION OVER THE PRINCIPAL
OFFICE OF THE COOPERATIVE.
2. THE REGULATION DIVISION/SECTION SHALL EVALUATE THE SUBMITTED
DOCUMENTS. IF FOUND TO BE IN ORDER, THE CENTRAL/REGIONAL OFFICE SHALL
ISSUE A NOTICE OF APPROVAL WITHIN THREE (3) WORKING DAYS FROM RECEIPT
OF THE REQUEST.
3. IN CASE OF DENIAL OR DEFERMENT OF REQUEST, THE CDA REGIONAL OFFICE
SHALL NOTIFY THE APPLICANT-COOPERATIVE WITHIN THREE (3) WORKING DAYS
UPON RECEIPT OF THE REQUEST, SPECIFYING THE GROUNDS THEREFOR.

ARTICLE VI, MANNER OF SUBMISSION
ALL REQUESTS FOR REGULATORY RELIEF, TOGETHER WITH SUPPORTING
DOCUMENTS, MAY BE SUBMITTED THROUGH ANY OF THE FOLLOWING MEANS:
1. PERSONALLY, IN THE CASE OF AREAS UNDER GENERAL COMMUNITY QUARANTINE,
PROVIDED HEALTH AND SAFETY PROTOCOLS ARE OBSERVED;
2. THROUGH REGISTERED MAIL OR COURIER SERVICES; OR
3. THROUGH ELECTRONIC MAIL (EMAIL) TO BE SENT TO THE E-MAIL ADDRESS OF THE
REGIONAL OFFICE HAVING JURISDICTION OVER THE PRINCIPAL OFFICE OF THE
COOPERATIVE

MANNER OF SUBMISSION
IN SUBMITTING THROUGH EMAIL, THE FOLLOWING CONDITIONS MUST BE MET:
1. ALL DOCUMENTS MUST BE SCANNED IN A PORTABLE DOCUMENT FORMAT (PDF), TO BE SENT
AS ATTACHMENTS TO AN EMAIL FROM A VALID COOPERATIVE EMAIL ACCOUNT OR ADDRESS
OF AN AUTHORIZED REPRESENTATIVE.
2. THE EMAIL SHOULD CONTAIN A DECLARATION BY THE AUTHORIZED REPRESENTATIVE OF THE
COOPERATIVE THAT THE DOCUMENTS SUBMITTED ARE AUTHENTIC AND THAT THE HARD
COPIES THEREOF SHALL BE SUBMITTED TO THE AUTHORITY WITHIN THE PRESCRIBED
PERIOD. FOR PURPOSES HEREOF, THE CDA SHALL INFORM THE COOPERATIVES OF THE
DATE FOR SUBMISSION OF THE DULY SIGNED HARD COPIES OF THE DOCUMENTS. THE FULL
NAME, COOPERATIVE ADDRESS, AND MOBILE NUMBER OF THE AUTHORIZED
REPRESENTATIVE MUST BE STATED.
3. IT SHALL BE UNDERSTOOD HOWEVER, THAT THE PERSON(S) WHOSE SIGNATURE(S) APPEARS
IN THE DOCUMENTS SUBMITTED SHALL BE HELD ACCOUNTABLE UNDER THE APPROPRIATE
PROVISIONS OF THE CODE.

ARTICLE VII, DISCLOSURE REQUIREMENT
COOPERATIVES WHO AVAILED OF THE HEREIN REGULATORY RELIEFS SHALL
DISCLOSE THE FOLLOWING INFORMATION IN THE NOTES TO FINANCIAL
STATEMENTS, FOR ALL THE REPORTING PERIODS AFFECTED:
1. THE AMOUNT EXCLUDED IN THE COMPUTATION OF PAST DUE; OR
2. THE STAGGERED RECOGNITION OF APLL, INCLUDING THE SCHEDULE OF
STAGGERED ALLOCATION USED; OR
3. AMOUNT OF CASH TAKEN FROM THE RESERVE FUND TO BE REPLENISHED

ARTICLE VIII, MONITORING BY THE
AUTHORITY
COMPLIANCE WITH THIS GUIDELINES BY COOPERATIVES WHO AVAILED OF
THESE REGULATORY RELIEFS SHALL BE MONITORED BY THE AUTHORITY
DURING INSPECTION.

EFFECTIVITY.
THIS MEMORANDUM CIRCULAR SHALL TAKE EFFECT IMMEDIATELY.
APPROVED PER BOD RESOLUTION NO. 206, S-2020 DATED JULY 29, 2020.

CDA MC 2020-18

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CDA MC 2020-18