President Rodrigo Duterte has signed the Financial Institutions Strategic Transfer (Fist) Act into law, which helps banks remain flexible amid the Covid-19 pandemic.

The Fist Act, or Republic Act (RA) 11523, will address the financial sector’s non-performing asset problems, Malacañang said Wednesday.

“Kinikilala ng estado ang mahalagang papel po ng mga bangko at financial institutions as mobilizers of savings and investments and in providing the needed financial system liquidity to keep the economy afloat,” Palace spokesman Harry Roque said in a PTV-4 interview.

The new law also aims to improve the liquidity of the financial system, which according to RA could be harnessed to “propel economic growth and maintain financial stability.”

Roque said the Fist Act would also encourage the private sector to invest in non-performing assets.

“Nananatili ang ating layunin na ang pagbangon ng ekonomiya sa pamamagitan ng pagpapatupad ng fiscal at economic reforms at kasama ng rollout ng ating mass vaccination program, ay sabay-sabay tayong gagaling at aahon mula po sa Covid-19,” he added.

Bangko Sentral ng Pilipinas Gov. Benjamin Diokno said the new law would allow banks to easily dispose of bad assets through Asset Management Companies, thus helping the banking system stable despite the pandemic’s effects.

He added that through Fist, the ratio of nonperforming loans could be reduced by about 0.63 to 7.0 percentage points.