Question & AnswerQ&A (BSP CIRCULAR NO. 700, S. 2010)
BSP Circular No. 700, s. 2010 pertains to the amendment of regulations on the single borrower’s limit for banks and quasi-banks in the Philippines.
Banks may increase their total loans, credit accommodations, and guarantees by an additional 10% of their net worth if these additional liabilities are adequately secured by trust receipts, shipping documents, warehouse receipts, or other similar documents transferring or securing title over readily marketable, non-perishable goods that are fully insured.
Banks may increase their limit by an additional 25% of their net worth for loans related to infrastructure and/or development projects under the PPP Program, certified by the Secretary of Socio-Economic Planning.
The total exposure to any borrower for PPP-related infrastructure or development projects shall not exceed 25% of the bank’s net worth.
The additional 25% credit exposure limit is only allowed for a period of three years from the effectivity of the Circular.
No, loans based on the contracted amount as of the end of the three-year period shall not be increased but may be reduced; once reduced, exposures cannot be increased thereafter.
The purpose is to support loans for infrastructure and/or development projects under the government’s Public-Private Partnership (PPP) Program.
Banks must consider credit risk concentration in their internal assessment of capital adequacy relative to their overall risk profile and operating environment.
Yes, Section 2 of the Circular amends the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI) allowing quasi-banks a similar 25% additional loan limit for PPP projects.
This Circular takes effect 15 calendar days after its publication in the Official Gazette or in a newspaper of general circulation.