Law Summary
Introduction
This Circular, adopted on November 11, 1999, establishes guidelines for the setting of variable grace periods for loans related to long-gestating agriculture and fisheries projects, as authorized by Resolution No. 1566 and aligned with Section 24 of Republic Act No. 8435 (Agriculture and Fisheries Modernization Act of 1997).
Section X349: Agriculture and Fisheries Projects with Long Gestation Period
- Legal Principle: Long-gestating agriculture and fisheries projects are entitled to extended grace periods for loan repayments based on the project's economic life.
Key Definitions
- Gestation Period: The time from project commencement until it becomes economically productive and generates revenue.
- Grace Period: The timeframe during which loan payments can be delayed without incurring penalties.
Important Requirements
- Loan Extension:
- Banks and guarantee institutions may grant loans with a grace period of up to seven (7) years for viable long-gestating projects.
- Suggested gestation and grace periods for specific projects are referenced in Appendix 36.
Subsection X349.3: Responsibility of Lending Banks
- Requirements:
- Lending banks must implement necessary safeguards to assess project viability and the borrower's ability to meet loan commitments.
Subsection X349.4: Past Due Loans
- Application of Rules:
- The rules regarding past due loans under Section X306 apply; however, the reckoning date for past due accounts will be based on the grace period instead of the original loan maturity.
Subsection X349.5: Non-Performing Loans
- Application of Rules:
- The rules concerning non-performing loans under Section X309 are applicable, with the reckoning date for non-performing loans also based on the grace period rather than the original loan maturity.
Effective Date
- This Circular is effective immediately following its adoption on November 11, 1999.
Key Takeaways
- Long-gestating agriculture and fisheries projects are eligible for grace periods of up to seven years for loan repayments.
- Banks are responsible for ensuring project viability and borrower capability.
- The reckoning dates for past due and non-performing loans are shifted to the grace period.
- These guidelines are part of the broader regulatory framework established under Republic Act No. 8435.