BSP mulls longer repayment for salary loans

Upgrade to High-Speed Internet for only ₱1499/month!

Enjoy up to 100 Mbps fiber broadband, perfect for browsing, streaming, and gaming.

Visit Suniway.ph to learn

March 2, 2026 | 12:00am

MANILA, Philippines — The Bangko Sentral ng Pilipinas (BSP) is considering changes to rules governing salary-based consumer loans, including the possible removal of the current loan tenor cap, in a move aimed at giving borrowers more flexibility in managing repayments and easing monthly debt obligations.

In a statement, the central bank said its initial assessment of existing regulations on salary-based general-purpose consumption loans (SBGPCLs), which include banks’ salary loans extended to teachers and other employees for personal consumption, prompted a review of current restrictions on loan maturity.

“Based on the initial assessment of BSP regulations on salary loans, including banks’ lending to teachers for personal consumption, the BSP is considering possible amendments to the regulations governing SBGPCLs, particularly the lifting of the existing tenor limit,” the BSP said.

Under current rules, salary loans are generally capped at a three-year term, which may be extended only in meritorious cases, provided total maturity does not exceed five years.

The proposed adjustments would allow banks to offer longer repayment periods depending on borrower profiles and risk assessments.

The central bank said the objective is to provide “greater repayment flexibility” by allowing lenders to structure loan terms that better match borrowers’ cash flow and financial capacity. The approach, it said, could help reduce monthly amortization pressures while maintaining safeguards against excessive risk.

According to the BSP, longer repayment tenors would still be subject to prudent credit standards, including assessment of the borrower’s ability to pay, income stability and payment track record. The regulator emphasized that any regulatory easing would not mean a relaxation of responsible lending practices.

The review comes amid calls from some sectors, including educators, for more manageable repayment schedules as salary loans remain a common source of short-term financing for daily needs and emergency expenses.

Reports earlier indicated that the Department of Education had sought a BSP review of repayment terms after teachers requested longer payment periods to reduce monthly deductions from their salaries.

The potential rule change forms part of the BSP’s broader effort to balance consumer protection with credit accessibility, especially as demand for personal and salary-based lending continues to grow alongside household financing needs.