QuestionsQuestions (BSP CIRCULAR LETTER)
It is a BSP Circular Letter on the ceiling on the real estate exposure of banks, adopted on 23 November 1999.
The amendments were decided by the Monetary Board in Resolution No. 1371 dated 24 September 1999.
The Circular Letter amends regulations imposing a ceiling on banks’ real estate exposure.
Circular Letter dated 5 June 1997.
First, the reduction of loan values from 70% to 60% of appraised value of real estate collateral; second, the 20% aggregate limit on real estate loans.
Loans extended to housing developers for socialized and/or low-cost housing projects under the Government’s National Shelter Program are among those included in the exemptions.
The exemption includes loans to housing developers for socialized/low-cost projects such that they are not required to follow the 70% to 60% reduction of loan values under the 5 June 1997 Circular Letter.
The exemption likewise provides that the covered loans are excluded from the requirements of the 20% aggregate limit on real estate loans.
No. The provision that real estate loans (including those not exceeding P3.5 million to finance acquisition or improvement of residential units) shall not exceed 30% of a bank’s total loan portfolio remains.
Real estate loans shall not exceed 30% of a bank’s total loan portfolio.
Real estate loans include loans not exceeding P3.5 million used to finance the acquisition or improvement of residential units.
It takes effect immediately.
It was signed by (SGD.) Rafael B. Buenaventura, Governor of the BSP.
It indicates that despite the exemptions from certain prior requirements (loan value reduction and aggregate limit), the 30% cap on real estate loans relative to total loan portfolio continues to apply.
Whether the loan is extended to a housing developer for socialized and/or low-cost housing projects under the Government’s National Shelter Program.
The exemption relieves covered loans from certain requirements of the 5 June 1997 Circular Letter (loan value reduction and the 20% aggregate limit), but the Circular Letter explicitly retains the overall 30% cap on real estate loans as part of the bank’s total loan portfolio.