Reference no: EM133003873

Bangko Sentral ng Pilipinas

• Luzon Bank is a duly registered Bangko Sentral ng Pilipinas Supervised Financial Institutions (BSFIs) operating in every city of Luzon. In March 2020, the COVID -19 outbreak happened in the entire country. On March 8, 2020, the entire Luzon was placed under Extreme Enhanced Community quarantine. The said turn of events greatly impacted the BSFIs in terms of risk related exposures that severely affected borrowers. Operations were also disrupted due to localized work suspensions and heightened health and safety risks faced by the BSFIs' employees and customers.
• To mitigate the risk aforementioned, Luzon Bank wanted to avail of the regulatory relief package under Memorandum No. M - 2020 - 08 issued by the BSP. The bank's board of directors plan to provide P50,000 financial assistance to its branch managers. Moreover, the bank wants to adopt a staggered bookkeeping of allowance for credit losses over a maximum of five (5) years for all types of credits it extended to individuals and businesses directly affected by the outbreak.

Problem 1. What should Luzon Bank submit to avail the relief package?

Problem 2. What function or role of the BSP is being manifested in the above scenario? Explain.