Rediscounting Facility for Overseas Contract Workers

September 30, 1982 CBP CIRCULAR NO. 894-82 REDISCOUNTING FACILITY FOR OVERSEAS CONTRACT WORKERS The Monetary Board, in its Resolution No. 1742 dated September 24, 1982, approved the amendment of the Manual of Regulations for Banks and Other Financial Intermediaries by adding the following as Subsection 2273.5 of Book II (Thrift Banks) and as Subsection 3274.6 of Book III (Rural Banks) which shall govern the rediscounting of papers of overseas contract workers: "Promissory Notes of Overseas Contract Workers "a. Coverage Promissory notes executed by overseas contract workers in favor of stock savings and loan associations and rural banks against overseas job contracts of said workers shall be eligible for rediscounting with the Central Bank. "b. Terms and conditions of rediscounting "(1) The promissory notes shall be rediscounted at eighty percent (80%) loan value of the face amount or outstanding balance thereof as of the date of rediscounting: Provided, That the total face amount or outstanding balance of paper belonging to one borrower which may be rediscounted with the Central Bank shall not exceed P5,000; "(2) Rediscounting availments shall be assessed a rediscount rate of 3 percent per annum; "(3) The rate of interest that may be charged by stock savings and loan associations and rural banks on paper rediscounted with the Central Bank in accordance with the provisions of this Subsection shall not exceed 12 percent per annum inclusive of service and other charges; "(4) The period for each rediscounting availment shall not exceed one hundred and eighty (180) days; "(5) For rediscounting of promissory notes covering subsequent loans by a worker-borrower whose previous promissory note had been rediscounted with the Central Bank, the stock savings and loan association or the rural bank shall require documentary proof from the worker-borrower that he has complied with the mandatory remittance rule." "c. The promissory notes, to be eligible for rediscounting, must contain either of the following stipulations on the manner of repayment thereof. "(1) Direct inward remittance in foreign exchange by the worker to the stock savings and loan association/rural bank (which shall be specifically authorized by the worker to deduct the amortizations from the proceeds of such remittance) through a commercial bank designated by the stock savings and loan association/rural bank to act as the conduit for the remittances and with which the stock savings and loan association/rural bank maintains a special foreign currency deposit account specifically authorized by the Central Bank for the sole purpose of servicing such remittances; or "(2) Direct payment by the worker's beneficiaries/representatives/allottees, supported by proof that such payment was funded by inward remittance of the salaries of such workers and that the corresponding foreign exchange has been surrendered/sold to the banking system. "d. Availments under this facility shall be chargeable against the basic rediscounting ceiling of the banking institution concerned. This Circular shall take effect immediately. FOR THE MONETARY BOARD: (SGD.) JAIME C. LAYA Governor