Law Summary

Introduction

This document summarizes BSP Circular No. 1295 issued on July 16, 1991, detailing the sanctions and penalties imposed on banks for exceeding the single borrower's limit, as approved by the Monetary Board in its Resolution No. 716 dated June 28, 1991.

Sanctions for Violations

This section outlines the specific sanctions and penalties imposed for violations of the single borrower's limit.

Monetary Penalties

• First Offense:
  • Fine: ₱500 per day for each violation, calculated from the date the excess borrowing commenced until it is resolved.
• Subsequent Offenses:
  • Fine: ₱5,000 per day for each violation, similarly calculated from the date of excess until resolved.

Other Sanctions

• First Offense:
  • Reprimand: Directors/officers responsible for the excess borrowing will receive a reprimand with a warning that further violations will incur more severe penalties.
• Subsequent Offenses:
  • Suspension: A 90-day suspension without pay for the directors/officers involved.
  • Bank Restrictions: Suspension of the bank from expanding its branches and from utilizing Central Bank rediscounting facilities until the excess borrowing is rectified.

Implementation and Effectivity

• The provisions of this Circular are effective immediately upon adoption and implementation as of July 16, 1991.

Key Takeaways

• The BSP Circular No. 1295 details strict monetary and administrative penalties for banks exceeding the single borrower’s limit.
• Monetary penalties escalate significantly for repeated offenses.
• Directors and officers face personal reprimands and possible suspensions for violations.
• The bank faces operational restrictions until compliance is achieved.
• The Circular is effective immediately upon issuance, emphasizing the urgency of adherence to the regulations.