BSP CIRCULAR NO. 114

Legal Basis: This Circular is pursuant to Monetary Board Resolution No. 723 dated 24 July 1996, amending existing guidelines regarding emergency loans to banking institutions as stated in previous Circulars No. 984 (December 7, 1983) and No. 35 (July 25, 1994).
Effective Date: The Circular takes effect immediately upon adoption on September 5, 1996.

Provision: Liquidated damages for delayed payments on emergency loans or advances shall not exceed five percent (5%).
Application: This provision is retained from prior regulations and continues to apply to banking institutions that fail to make timely payments.
Consequences: Failure to comply with payment deadlines will incur specified penalties.

Determination of Interest Rate:
- The interest rate charged on emergency loans or advances will be based on the average of the 91-day Treasury Bill (T-Bill) rate from the auction immediately preceding the loan's release.
- Repricing: This interest rate is subject to repricing every three (3) months, again based on the aforementioned T-Bill rate.
Key Definitions:
- 91-day Treasury Bill (T-Bill): A short-term government security that reflects prevailing interest rates.

Special Provisions: In cases involving the rehabilitation of closed banks or under circumstances deemed meritorious by the Monetary Board:
- The standard rates for liquidated damages and interest on loans may be waived or modified.
Flexibility: This provision allows for discretion in applying the penalties and interest rates based on specific circumstances.

Inconsistencies: Any provisions in Circular No. 35 that are inconsistent with the current Circular are amended accordingly.
Legal Reference: This ensures alignment with the newly established guidelines set forth in BSP Circular No. 114.

Emergency loans to banking institutions are subject to a maximum liquidated damages of 5% for delayed payments.
Interest rates are pegged to the average 91-day T-Bill rate, with repricing every three months.
Special provisions exist for the rehabilitation of closed banks, allowing for flexibility in penalties and interest.
The Circular amends previous guidelines to ensure consistency with current regulations and practices.