BSP asks banks to apply SBLs to curb undue risk-taking

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THE Bangko Sentral ng Pilipinas (BSP) urged banks to apply the separate Single Borrower’s Limit (SBL) for project-finance exposures after monetary authorities earlier relaxed measures on the limit.

In a virtual briefing on Thursday, BSP Governor Benjamin E. Diokno said applying the separate SBL is still subject to compliance with certain conditions.

To be eligible for the separate SBL for project finance, the BSP said bank exposures must meet the conditions under Section 362 of the Manual of Regulations for Banks.

Among the conditions is that the purpose of the obligation should be to finance projects that are in line with the priority programs and projects of the Philippine National Government. Some of these projects are for water supply, wastewater and sanitation services.

The terms of the obligation must also give the lender a substantial degree of control over the assets and the income that it generates by instituting standard prudential controls to safeguard creditors’ interests.

The BSP also said the lending bank shall consider its total project-finance exposures in managing risks and complying with its internal limits on large exposures and credit risk concentrations pursuant to existing BSP regulations.

This is to curb excessive credit risk-taking, the BSP said.

The separate SBL for project finance has been temporarily increased to 30 percent from 25 percent until end-December this year.

“The adoption by the BSP of a separate SBL for project finance aims to mobilize private sector funding toward projects that support the country’s economic recovery efforts and nation building,” Diokno said.

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