BSP Circular No. 1223 on Loan Restructuring

Restructured loans refer to loans whose principal terms and conditions have been modified under a restructuring agreement.
Modifications may include changes in maturity, interest rate, collateral, or increase in debt due to capitalization of accrued interest or charges.
Loans involved in litigation, judicially approved compromises, or subject to court/SEC-approved suspension or new payment plans are excluded from the "restructured loans" classification.

Restructuring requires approval via a board resolution that must detail:
- Justification for restructuring approval.
- Borrower's capacity to pay, including business viability.
- Nature and extent of protection for the bank's/NBQB's exposure.
Board authority to approve can be delegated to a committee or officers, subject to board-prescribed guidelines.
These guidelines must be submitted to the Central Bank's supervising department within thirty days of approval.
Loans to DOSRI and loans previously approved by the executive committee must still be approved by the Board according to existing rules.
Any restructuring not approved by the board must be reported to it for confirmation.

Restructured loans are to be classified distinctly as a separate account category.
Specific records for restructured loan accounts must be maintained for proper recording and reporting.

Restructured loans shall be considered past due following the applicable provisions in the relevant subsections of the Manual of Regulations for Banks and Other Financial Intermediaries.

Interest on extended or renewed loans can be accrued only if there is no previously accrued but uncollected interest.
Interest on restructured loans may be accrued only if:
1. The loan is current at the time of interest accrual.
2. There is no previously accrued or capitalized but uncollected interest on the loan.