Clearing Loss Ceilings and Collateralized Overnight Clearing Line
- Establishes ceilings for clearing losses not covered by interbank borrowings.
- Authorizes unwinding of clearing transactions if loss ceilings are breached.
- Defines ceiling as a collateralized overnight clearing line extended by BSP.
- Rural and thrift banks must apply to BSP Department of Loans and Credit (DLC) for this loan line.
- Loan availments bear interest at the 91-day Treasury Bill rate from the last auction before each availment.
Procedures for Unwinding Clearing Transactions
- Applies to inward items except returned items and limited to local exchanges.
- Aggregate inward items from all clearing centers, including "On Manila" clearing demands, are ranked from highest to lowest.
- Unsettled net clearing losses are eliminated by unwinding inward items starting with centers having the highest aggregate values.
- If inward items for a clearing center exceed unsettled losses, all inward items for that center are unwound.
- For checks cleared through PCHC, unwinding is done to the extent of unsettled clearing loss based on PCHC rules.
- Unwound checks must be returned to presenting banks by 9:00 AM the following clearing day.
Settlement Risk Management Measures for Rural and Thrift Banks
- Outward items settlement is value dated on the clearing day net of returns.
- Defines "value date" or "settlement date" uniformly as the next clearing day when dishonored checks are returned within the reglementary period.
- For inter-regional and Manila clearing items, value dates are defined in BSP clearing circulars.
- A ceiling on overdrafts due to unaddressed clearing losses is set, aligned with the collateralized overnight clearing line.
- Overdrafts exceeding the ceiling authorize BSP Accounting Department to instruct clearing centers to unwind transactions per Section 3 procedures.
Effective Date and Implementation
- Circular and its rules effective September 15, 1998.
- Signed by Governor Gabriel C. Singson on September 3, 1998.