QuestionsQuestions (BSP CIRCULAR NO. 516, S. 2006)
It was issued pursuant to Monetary Board Resolution No. 188 dated 16 February 2006, amending provisions of Section 2205 and Appendix 31 of the Manual of Regulations for Banks (MORB).
It must apply for the clearing line with the appropriate Supervision and Examination Department (SED) of the BSP.
Any overdraft incurred under Section 102 of RA No. 7653 may be converted into an emergency loan or advance, provided it complies with the guidelines for emergency loans under Subsection X 272.2 of the MORB.
Those authorized to participate directly in the clearing operations of PCHC.
To the appropriate SED (Supervision and Examination Department) of the BSP.
A copy of the application and the following: (1) duly notarized Secretary’s Certificate with a board resolution authorizing the application and designating authorized officers; (2) duly signed and notarized Overnight Clearing Line Agreement between the bank and the BSP; (3) duly accomplished Tripartite Memorandum of Agreement among BSP, the applicant-bank, and the PCHC; (4) notarized Surety Agreement executed by controlling stockholders and eligible persons; and (5) collateral documents to cover the loan line.
Controlling stockholders (owning more than 50% of voting stocks) and every person/group whose stockholdings can elect at least one director must execute it. They obligate themselves jointly and severally to promptly pay on maturity or when due the BSP (and successors/assigns) all promissory notes covering availments against the loan line.
Government securities: 80% of current market value. Commercial Credits (AAA): the text excerpt indicates “c.1.b Commercial Credits (AAA)” under the acceptable collaterals, with the detailed loan-value table shown for government securities (80%); students should note the circular lists these as first-class collaterals within the secured framework.
70% of the appraised value of the land and insured improvements determined by a licensed and independent appraiser acceptable to the BSP.
70% of the appraised value of the property securing the loan evidenced by negotiable instruments as determined by a licensed and independent appraiser acceptable to the BSP, or 80% of the outstanding balance of such loan, whichever is lower.
80% of the current market value of the foreign currency deposits with the BSP.
The DLC informs the appropriate SED of the total loan value of eligible collaterals; the SED then recommends to the Monetary Board the approval of the bank’s loan line once the application and amendments are in order.
It may be amended only once every twelve (12) months. The loan line must be at least five (5) percent of the bank’s deposit liabilities as of end of the prior month.
The bank may change or substitute collateral, specially matured government securities. The DLC shall act on the request, provided it will not result in an amendment of the approved overnight clearing line.
At the 91-day Treasury Bill rate of the last auction immediately preceding the availment.
When: (1) collections are received on mortgage credits; (2) mortgage credits become past due; (3) the property mortgaged was sold; or (4) the collateral assets fall short of the definition of first class collateral.
The bank must duly inform the DLC of collections on mortgaged credits or sale of mortgaged assets and ensure that adequate records on collections and sales made by branches are maintained in its head office.
Item c was amended deleting the word DLC; it now reads: “Collateralized overnight clearing line granted by the BSP.”
After fifteen (15) days from its publication in the Official Gazette or in a newspaper of general circulation.