Interest Rate and Bank Spread
- Interest rate is based on the prevailing three-month London Interbank Bid Rate (LIBID).
- The rate is reviewed and set every three months.
- Banks' spread on the interest rate should not exceed 1% per annum after applicable taxes on foreign exchange loans.
Loan Value and Credit Assessment
- Loan value for credit instruments used as collateral shall be 100% of the face amount or outstanding loan balance.
- The loan amount granted to an exporter-borrower depends on the bank's credit assessment and valuation procedures.
- The loan amount shall not exceed the value of the Letter of Credit (LC), Purchase Order (PO), Sales Contract (SC), or Service Contract.
Maturity Periods
- Export packing credits have a maximum maturity of 90 days and must not extend beyond the expiry of the assigned LC/PO/SC.
- Export bills maturity varies by drawee bank location:
- 10 days for Asia, Australia, and US West Coast
- 15 days for US East Coast
- 30 days for Europe
- 40 days for Africa and the Middle East
- Service exporters’ credits must mature within 180 days from availment or before the contract expiry date.
Loan Release and Repayment Procedures
- Dollar proceeds are released via BSP Treasury Department for credit to the borrowing bank's correspondent bank on the application date, provided papers are complete and received before noon.
- Loans must be repaid in dollars.
- Borrowing banks must submit remittance instructions indicating payments covering the maturing loan principal and accrued interest.
Rediscount Ceiling and Documentary Requirements
- Availments against dollar-denominated loans are charged against the bank's rediscount ceiling of 100% of net worth as of the end of the prior quarter.
- For foreign bank branches, rediscount ceiling is 25% of "Net Due To" plus assigned capital.
- Documentary requirements for peso-denominated loans apply similarly to dollar-denominated loans.
Effectivity and Supersession
- This Circular supersedes BSP Circular No. 57 dated December 9, 1994.
- The Circular took effect immediately upon adoption on April 12, 1995.