QuestionsQuestions (BSP CIRCULAR NO. 515, S. 2006)
It is issued pursuant to Sections 81 and 82(a), (b), and (c) of Republic Act No. 7653 (The New Central Bank Act).
That BSP rediscounting, discounting, loans and advances shall be used to influence the volume of credit consistent with the objective of price stability.
It supersedes existing provisions of Sections X268 and X269 of the MORB and revises the corresponding subsections.
Rediscounting availments of all eligible banks shall be drawn against their rediscounting line, which is based on their total credit score under CRIS.
Management and risk assessment (management, risk management system), financial indicators (capital adequacy, asset quality, profitability, liquidity), and credit experience (repayment record, compliance with other terms and conditions).
Key documents include: RL Form No. 1 application; a board resolution authorizing the application and designating at least two officers with specimen signatures; consolidated statements (condition and income/expenses) for required periods; tripartite depository agreement (RL Form No. 2) for banks with designated custodians; Articles of Incorporation for new applicants; organizational chart; list of BOD/principal officers and their training/work experience; annual report/audited financial statements; and the Manual of Operations for microfinance operations for microfinance facility applicants.
Among others: minimum capital requirements; required capital adequacy ratio; required loan-loss provisions/valuation reserves based on latest SED examination; required reserves for two consecutive weeks; NPL ratio not exceeding industry average adjusted by +2% (or MB-approved allowable NPL); positive DDA balance with BSP; no past due obligations/collateral deficiencies; CAMELS composite rating of at least 3; DOSRI past due loans to aggregate past due loans not more than 5%; premises investment not more than 50% of net worth; and required liquidity floor for government deposits.
At least one year track record in microfinance; at least 500 active microfinance borrowers; microfinance past due ratio not more than 5% as of the end of the month preceding application; collections-to-collectibles ratio not less than 95% for the preceding 12 months (excluding prepayments); and officers/staff trained in microfinance and at least one year microcredit experience.
It is based on adjusted net worth with specific multipliers: CRIS 90.1–100 = 200%; 80.1–90.0 = 150%; 70.1–80.0 = 125%; 60.1–70.0 = 100%; 50.1–60.0 = 75%; below 50.1 = 50%. A one-time six-month transition applies for reduced lines due to CRIS operations.
The term is one year unless cancelled or revoked. It is renewable annually upon filing an application at least one quarter before expiry.
They must have a positive demand deposit account (DDA) balance with the BSP and must have no past due obligations or collateral deficiencies due to matured notes/unremitted collections/missing collaterals as of the date of application/release.
Examples excluded include: interbank loans; DOSRI loans; extended/restructured loans; past due loans; unsecured loans; personal consumption loans; loans for capital asset acquisition; loans to non-bank financial institutions; and loans funded from borrowings from GFIs.
If the bank has a CAMELS rating of 4, unsecured loans may be accepted provided they are secured by a duly registered mortgage on the bank’s real estate, where 70% of the appraised value equals or exceeds the outstanding balance of the unsecured promissory note.
Generally, loan value is 80% of the outstanding balance of the borrower’s PN/EB/BX. Exceptions include: socialized/low-cost housing—80% of amortization covering principal payments due within 1 year from rediscount; and agricultural loans with long gestation period—70% of outstanding balance of the PN.
(1) Commercial credits: 180 days from date of rediscount, but not beyond maturity date of PN/BX (with specific shorter terms for certain documents such as export packing at sight/EBs). (2) Production credits: up to 360 days from date of rediscount, not beyond maturity date of the PN. (3) Other credits: up to 360 days from date of rediscount, not beyond maturity date of the PN.
Peso: based on the applicable Treasury Bill rates for the last auction of the preceding week, mapped by loan maturity. Dollar/Yen: based on respective LIBOR rates for the last working day of the immediately preceding month.
Liquidated damages equivalent to 5% per annum for past due BSP loans and unpaid matured notes.
Total collections received before maturity must be remitted no later than five (5) banking days from receipt of collections to the BSP-designated remittance recipient (DLC/RLCU for peso; Federal Reserve Bank of New York for dollar rediscounts for account of BSP; Bank of Tokyo for yen rediscounts for account of BSP).
Prohibited without prior BSP approval: substitution of rediscounted PNs/EBs/BX and underlying collateral real estate; renewal of rediscounted promissory note without remitting payment while still outstanding with BSP; and acceptance of properties as payment (dacion en pago).
After fifteen (15) days from publication in the Official Gazette or in a newspaper of general circulation.