Question & AnswerQ&A (CIRCULAR NO. 1006)
The main purpose of BSP Circular No. 1006 is to provide policy guidelines on the conversion and transfer of foreign currency loans and Real and Other Properties Acquired (ROPA) from the books of the Foreign Currency Deposit Unit (FCDU)/Expanded FCDU (EFCDU) to peso loans and ROPA in the books of the Regular Banking Unit (RBU).
Yes, FCDU/EFCDU loans may be converted to peso loans and transferred from FCDU books to the RBU books without prior BSP approval, subject to certain conditions outlined in the circular.
The conditions include (i) approval of sound policies for redenomination by the Board of Directors; (ii) implementation of appropriate risk management systems and compliance with FCDU/EFCDU cover requirements and regulations; and (iii) actual foreign currency settlement simultaneous with the transfer using prevailing exchange rates.
No, no income shall be recognized in either the FCDU/EFCDU or RBU books arising from the redenomination of loans.
There must be actual settlement in foreign currency, simultaneous with the transfer, by the RBU to the FCDU/EFCDU of the total amount of foreign currency-denominated loans/ROPA being transferred, using the prevailing foreign exchange/conversion rate at the time of transfer.
Yes, subject to the same conditions that apply to the conversion and transfer of loans, FCDU/EFCDU ROPA can also be converted to peso ROPA and transferred to the RBU books without prior BSP approval.
Annex A of Circular No. 1006 contains the prescribed accounting entries on the conversion and transfer of FCDU/EFCDU loans and ROPA to the RBU books.
Circular No. 1006 supersedes BSP Circular No. 420 dated February 10, 2004.
Circular No. 1006 took effect 15 calendar days after its publication either in the Official Gazette or in a newspaper of general circulation in the Philippines.
The Board of Directors of banks is responsible for approving sound policies for the redenomination of FCDU/EFCDU loans.