Law Summary
Introduction
This document summarizes BSP Circular No. 1374, issued on December 29, 1992, which amends Circular No. 1288 as approved by the Monetary Board in Resolution No. 1100 dated November 23, 1992.
Amendment to Section 1
Legal Principle/Provision
The amendment modifies the eligibility criteria for business entities based on total assets.
Key Definitions Introduced
- Total Assets: Refers to the sum of all assets of a business entity, including loans, but excludes the land where the office, plant, and equipment are located.
Important Requirements or Procedures Outlined
- Business entities with total assets of Ten Million Pesos (P10,000,000) and below are subject to this provision.
Relevant Timeframes, Deadlines, or Expiration Details
- The amendment is effective immediately from the date of issuance.
• Key Details
- Total assets must not include land value.
- The threshold for eligibility is strictly capped at P10,000,000.
Amendment to Section 3
Legal Principle/Provision
This section outlines the permissible uses for funds set aside by member banks under the amended Circular.
Important Requirements or Procedures Outlined
Funds may be allocated for:
- Loans to small enterprises.
- Instruments offered by the SBGFC (Small Business Guarantee and Finance Corporation).
- Purchase of promissory notes from lending institutions and/or NGOs.
- Equity investments and loans to the BAP Credit Guaranty Corporation (BCGC).
Relevant Timeframes, Deadlines, or Expiration Details
- Funds held in the form of Due from local Banks are authorized only until the end of March 1993.
• Key Details
Uninvested funds must be in forms that are:
- Free and unencumbered.
- Not hypothecated or earmarked for other purposes.
The Accounting Department is tasked with maintaining a special account for deposited amounts, which are excluded from the bank's legal reserves.
Conclusion
This Circular reinforces the BSP’s commitment to supporting small enterprises by regulating the allocation of funds and setting asset thresholds.
Key Takeaways
- The total asset limit for qualifying small enterprises is set at P10,000,000.
- Specific uses for funds are delineated to promote lending and support for small businesses.
- Member banks have until the end of March 1993 to comply with certain fund holding requirements.
- The Circular is effective immediately upon issuance, mandating compliance by all relevant banking entities.