PDIC Unveils CLIP 4.0 with Indefinite Extension to Enhance Loan Recovery Efforts
The Philippine Deposit Insurance Corp. (PDIC) has announced a significant overhaul of its Closed Bank Loan Incentive Program (CLIP), launching CLIP 4.0 effective January 1, 2026. This revamped initiative is now indefinitely extended, aiming to streamline processes and boost participation from borrowers of shuttered banks. The move is projected to accelerate loan recoveries, strengthen borrower financial positions, and improve payouts to creditors, marking a strategic shift in the state deposit insurer's approach to managing closed bank assets.
Simplified Terms and Standardized Incentives Drive Program Accessibility
Under CLIP 4.0, the PDIC has introduced simplified settlement terms and standardized incentives to encourage more borrowers to resolve outstanding obligations through one-time cash payments. Originally launched in 2021, CLIP was designed to assist borrowers in settling long-standing debts, protecting their credit standing, and preventing foreclosure on mortgaged assets. The updated version enhances transparency and ease of access, expanding eligibility to borrowers with total outstanding principal balances of up to P10 million, regardless of their bank's closure date.
Incentives are now determined solely by loan type and status, eliminating previous distinctions based on closure dates and other variables. For loans secured by real estate mortgages, the PDIC has standardized the interest rate on unbooked interest at 3 percent per annum, replacing variable rates of 3 to 5 percent. This change offers borrowers more predictable and potentially lower settlement costs, while the program retains a 50-percent discount on outstanding principal, booked interest, penalties, and other charges for clean loans and those secured by chattel mortgage or pledge. Additionally, all borrowers benefit from full waivers on unbooked penalties and related charges.
Dual Benefits for Borrowers and Creditors in Financial Recovery
By refining rules and enhancing incentives, CLIP 4.0 serves as both a relief mechanism for borrowers and a balance sheet cleanup tool for the financial system. For borrowers, the revised program provides clearer settlement terms and substantial discounts, enabling faster debt resolution and improved financial standing. This support can facilitate renewed access to formal credit and reduce the risk of asset foreclosure, offering a pathway to financial stability for individuals and businesses affected by bank closures.
For creditors of closed banks, accelerated loan settlements lead to quicker augmentation of liquid funds used to pay claims. As the statutory receiver, the PDIC collects loan payments from borrowers to optimize asset recovery and expedite distributions. The indefinite extension of CLIP underscores the PDIC's long-term strategy to sustain recovery efforts while alleviating burdens on affected borrowers, potentially enhancing overall financial stability in communities impacted by bank closures.
