Title
BSP CIRCULAR NO. 1317
Date
Dec 11, 1991
Exporters can now access Foreign Currency Deposit Unit (FCDU) loans from local commercial banks for up to 70% of their export contracts without prior Central Bank approval, streamlining financing for their peso or foreign exchange needs while adhering to specific conditions and reporting requirements.
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Law Summary

Introduction

This document summarizes BSP Circular No. 1317, issued on December 11, 1991, regarding Foreign Currency Deposit Unit (FCDU) loans available to exporters in the Philippines.

Eligibility and Loan Amount

  • Legal Principle: Exporters may access FCDU loans without prior approval from the Central Bank (CB).
  • Key Definitions:
    • FCDU Loans: Loans from a U.S. Dollar-based credit facility.
    • Export Irrevocable L/C: Letter of Credit related to export transactions.
  • Requirements:
    • Loan amount may be granted up to 70% of the value of the export irrevocable L/C, purchase order (P.O.), or sales contract (S.C.).
  • Important Details:
    • The loans are available for both peso and foreign exchange requirements.

Use of Proceeds

  • Legal Principle: Proceeds from FCDU loans can be utilized for specific purposes.
  • Requirements:
    • Proceeds may be converted to pesos through sale to the lending local commercial bank or retained in foreign exchange for import costs related to machinery or raw materials for export commodities.

Loan Payment Terms

  • Legal Principle: Repayment is linked to export proceeds.
  • Important Requirements:
    • Payment will be directly deducted from foreign exchange proceeds of export shipments.
    • The amount deducted shall not exceed 70% of the proceeds from each shipment.
  • Timeframe: Loans must have a maturity not exceeding 360 days.
  • Rollovers: Allowed if they align with the payment period of the relevant export documentation.

Default and Repayment Options

  • Legal Principle: Provisions for unpaid loans at maturity.
  • Requirements:
    • If any loan balance remains unpaid at maturity, the borrower can purchase foreign exchange from the banking system or other sources to settle the loan.

Loan Terms and Compliance

  • Legal Principle: Loan terms must align with market rates.
  • Key Definitions:
    • Prevailing Rates: Rates consistent with international capital markets.
  • Compliance Requirement:
    • Both FCDU and exporters must adhere to weekly reporting as prescribed by the Central Bank.

Sanctions and Violations

  • Legal Principle: Penalties for non-compliance with the Circular.
  • Consequences:
    • Exporters violating this Circular or other related CB guidelines may face sanctions approved by the Monetary Board.
    • Reference to Section 34 of R.A. 265 (as amended) regarding penalties.

Supersession of Previous Circulars

  • Legal Principle: This Circular supersedes prior regulations.
  • Important Note:
    • It replaces CB Circular No. 1262 dated November 9, 1990, and amends any inconsistent CB rules.

Key Takeaways

  • Exporters can access FCDU loans up to 70% of their export value without prior CB approval.
  • Proceeds from these loans must be used for specific purposes related to exports.
  • Loans must mature within 360 days, with options for rollovers linked to export documentation.
  • Non-compliance with the Circular can result in sanctions.
  • This Circular updates and replaces previous regulations regarding FCDU loans.

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