The BSP Memorandum No. M-2009-029 provides guidelines for banks on the rediscounting of medium and long-term loans to support end-user borrowers in the Philippines. Banks with existing rediscounting lines can qualify loans for various eligible projects, including capital expenditures, permanent working capital, and agricultural projects with extended gestation periods. The maximum maturity for these rediscounted loans is set at 360 days. Banks must also submit quarterly monitoring reports on the loans to the Department of Loans and Credit, ensuring ongoing compliance and oversight.
August 14, 2009
BSP MEMORANDUM NO. M-2009-029
| TO | : | All Concerned Banks |
| SUBJECT | : | Guidelines on the Rediscounting of Medium and Long Term Loans |
In order to provide banks assistance in the rediscounting of medium and long term loans, the following guidelines are hereby issued:
1. Banks with existing rediscounting lines with the Bangko Sentral ng Pilipinas (BSP) may rediscount the eligible medium and long term loans of their end-user borrowers doing business in the Philippines regardless of asset size. Eligible projects include, but are not limited to, loans for capital assets expenditure (CAPEX) used in trade or business, permanent working capital requirements, housing and agricultural projects with long gestation period.
a. CAPEX refers to purchase, construction, expansion, or improvement of long term assets used in trade or business: e.g., factory, warehouse, or office building; machinery and equipment; and transportation equipment.
b. Permanent working capital refers to the core level in trading assets (accounts receivable and inventory) brought about by long term or rapid sales growth or increased production capacity.
c. Agricultural projects with long gestation period are long term projects that become economically productive and generate revenue only after a period of three years. These include the following: TCHEDA
| Agricultural Project | Gestation |
| (No. of Years) | |
| Abaca | 4-6 |
| Black pepper | 3-4 |
| Cacao | 4-6 |
| Calamansi | 4-6 |
| Cashew | 5 |
| Coconut | 7-8 |
| Coffee | 3-4 |
| Durian | 5-7 |
| Lanzones | 6-8 |
| Mango | 5-7 |
| Mangosteen | 6-7 |
| Pomelo | 5-7 |
| Rambutan | 4-6 |
| Rubber | 6-8 |
| Palm Oil | 5-7 |
| Pili | 7 |
| Jackfruit | 5-7 |
d. Housing loans refer to the construction or acquisition of a house, house and lot, townhouse, or condominium by the homeowner borrower and the construction of residential houses and condominiums by the property developer. Loans to property developer shall not include the purchase of raw land and development cost, i.e., construction of roads, drainage, park, water system, etc.
2. Rediscounted medium and long term loans shall have a maximum maturity of 360 days; TaCDAH
3. Upon maturity or full payment of the BSP loan, banks shall have the option to reapply the loans; provided, that the promissory notes of the end-user borrowers remain current and outstanding, and that no adverse findings resulted from the loan monitoring and verification conducted by the Department of Loans and Credit (DLC);
4. The loan value of the eligible papers shall be equivalent to 90% of the outstanding principal balance of the end-user borrowers' promissory notes; and acITSD
5. Banks shall submit to the DLC on the 30th day of the month following the end of every quarter, monitoring reports on medium and long term loans rediscounted with the BSP. Attached is the prescribed format for the said report.
For information and guidance.
(SGD.) ROSALINDA S. DUMALIANGDirector
ATTACHMENT
Quarterly Monitoring Report for Medium and Long Term Loans