Monthly Reporting on Loan Loss Provisioning Compliance
- Institutions must submit a monthly report detailing actual compliance with general loan loss and specific provisioning requirements.
- Reports are also due by the 15th day after the cut-off month.
- The format is detailed in Schedules 1-3 of the memorandum.
Monitoring and Remedial Measures for Non-Performing Loans and Risk Assets
- Monthly reports must also cover remedial actions taken regarding:
- Double-digit non-performing loan (NPL) ratios.
- Increasing levels of Real and Other Properties Owned and Acquired (ROPOA).
- Restructured loans.
- Coverage ratios where loan loss reserves amount to less than 25% of total NPLs.
- These reports are similarly due by the 15th day after the cut-off month.
Establishment of a Special Credit Review Group
- A dedicated Credit Review Group must be created to oversee the periodic review and assessment of loan quality and other risk assets.
- This group shall apply the guidelines set forth in BSP’s Appendix 18 of the Manual of Regulations for Banks.
- These guidelines outline criteria for identifying and monitoring problem loans and risk assets, and for setting appropriate allowances for probable losses.
Consequences of Non-Compliance
- Monetary Board Resolution No. 665 prescribes sanctions including:
- Disqualification or deferment of the processing of branching applications.
- Imposition of sanctions under the Circular-Letter dated September 9, 1998.
- Sanctions apply for failure to maintain prescribed allowance levels for probable losses and non-compliance with minimum capital requirements under Circular No. 176 (dated September 7, 1998).
Regulatory Authority and Enforcement
- The directive is issued pursuant to Monetary Board Resolution No. 665 dated May 19, 1999.
- The Bangko Sentral ng Pilipinas through its Department of Thrift Banks and Non-Bank Financial Institutions oversees enforcement and compliance.
- Strict adherence to submission deadlines and report formats is required.