Question & AnswerQ&A (BSP CIRCULAR NO. 779)
The main purpose of BSP Circular No. 779 is to amend regulations on the single borrower’s limit applicable to banks and quasi-banks, particularly allowing an additional 25% credit exposure for loans related to infrastructure and development projects under the Public-Private Partnership (PPP) Program of the government.
Banks may increase their total loans, credit accommodations, and guarantees by an additional twenty-five percent (25%) of their net worth for infrastructure and development projects under the PPP Program, as certified by the Secretary of Socio-Economic Planning.
The additional 25% credit exposure is allowed for a period of six (6) years starting from December 28, 2010.
The infrastructure and/or development projects must be certified by the Secretary of Socio-Economic Planning for banks to avail the additional credit exposure.
The total exposures to any borrower for PPP-related projects shall not exceed twenty-five percent (25%) of the bank's net worth.
After the six-year period, the contracted amount of these loans, credit accommodations, and guarantees shall not be increased but may be reduced. Once reduced, these exposures cannot be increased thereafter.
Banks must consider the credit risk concentration arising from total exposures to all borrowers involved in PPP projects in their internal assessment of capital adequacy relative to their overall risk profile and operating environment.
Yes, the same provisions allowing an additional 25% credit exposure for PPP projects apply to quasi-banks under Section 4303Q of the Manual of Regulations for Non-Bank Financial Institutions (MORNBFI).
The circular took effect fifteen (15) calendar days after its publication in the Official Gazette or in a newspaper of general circulation.
The amendment is pursuant to Monetary Board Resolution No. 2049 dated 6 December 2012, issued by the Bangko Sentral ng Pilipinas (BSP).