BSP outlines offsite process for verifying rediscount loans

THE BANGKO SENTRAL ng Pilipinas (BSP) will require banks to submit collateral documents online for the verification of rediscount loans availed by lenders as the coronavirus pandemic continues.

Memorandum No. M-2020-081 signed by BSP Deputy Governor Francisco G. Dakila, Jr. on Oct. 22 said the usual on-site credit verification activities will be done remotely by allowing banks to present collateral documents through e-mail or BSP-organized virtual meetings.

The verification process will be conducted by the BSP’s Department of Loans and Credit (DLC).

Banks that will tap the rediscount facility are now required to send documents for post-credit and pre-credit verification, which include end-user borrower’s promissory notes, release of proceeds, certified true copy and duplicate copy of titles, duly registered real estate mortgage, and tax declarations, among others.

The central bank’s rediscount window lets lenders get hold of additional money supply by posting their collectibles from clients as collateral.

The cash — denominated in peso, dollar or yen — may be used by banks to disburse more loans for corporate or retail clients and to service unexpected withdrawals.

Based on the guidelines, collaterals that are agricultural lands larger than five hectares need to have clearance from the Department of Agrarian Reform. Proof of insurance policies, credit report memoranda, and applicable credit guarantees are also required to be submitted online.

For post-credit verification, additional requirements such as proof from banks that they have no pending legal cases and no past due obligations with other financial institutions. The schedule of bills payable for the rediscounting loan is also required.

The DLC will be responsible for evaluating the documents and is authorized to request for additional documents and to post queries in relation to the verification. Banks will be notified about the results of the verification through a letter.

BSP data showed peso rediscount loans hit P6.7 billion in September, more than triple the P2.1 billion logged a year ago. However, peso rediscount loans in the January to September period plummeted by 341.17% to P26.9 billion from the P118.674 billion in the first nine months of 2019.

The BSP has reduced the term spread on peso rediscount loans to zero regardless of maturity as part of its regulatory relief measures for banks amid the ongoing pandemic. — L.W.T. Noble