BSP exempts some GOCC loans from DOSRI rule

The Bangko Sentral ng Pilipinas (BSP) has decided to exempt certain loans to government-owned and controlled corporations (GOCCs) from its strict DOSRI rules to facilitate funding for infrastructure projects and priority programs.

With the elections coming up in 2008, GOCCs will now have access to loans from government financial institutions (GFIs) without tipping the limits to loans granted to directors, officers, stockholders and related interests (DOSRI).

Since government banks are owned by the government, GOCCs are considered related interests and were previously covered by DOSRI limits.

Because of these regulatory limits, the BSP said government banks "felt hampered" in providing credit to GOCCs responsible for carryng out government programs.

However, the BSP said the Monetary Board has approved the exemption of government bank lending to GOCCs for priority programs.

Covered by the exemptions are unsecured loans to DOSRI accounts of government banks, including GOCCs. These include loans for relending to other participating financial institutions or end-users and rediscounting facilities and guarantee programs for loans granted to the agricultural sector and micro/small/medium enterprises or MSMEs.

Under existing regulations, the BSP explained that total secured and unsecured DOSRI loans to GOCCs are not allowed to exceed the individual ceiling which limits the total outstanding loans to each of the banks’ DOSRI to an amount equivalent to their respective unencumbered deposits plus the book value of their capital contribution.

They are also covered by the aggregate ceiling which limited total outstanding loans to all DOSRI to an amount equivalent to 15 percent of the bank’s total loan portfolio or 100 percent of net worth, whichever was lower.

The existing rules also limited the total unsecured loans to each DOSRI to no more than 30 percent of their total loans while total unsecured total loans to all DOSRI were not allowed to exceed 30 percent of the aggregate DOSRI ceiling or the outstanding loans and other credit accommodations.

Under the revised rules, the BSP said loans granted by government banks to GOCCs are now excluded from the computation of the 30 percent ceiling (individual and aggregate) on unsecured loans.