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    Single Borrower's Limit Rev

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    Joey Sulte
    Single Borrower's Limit (SBL) is a rule that limits a bank's credit exposure to a single borrower to 25% of the bank's net worth. This is intended to minimize credit risks for the bank in case of default. The SBL includes direct liabilities to the bank as well as liabilities of related entities and individuals. Certain types of loans are excluded from the SBL, such as those backed by government guarantees or collateral. Exceptions to the SBL include loans to special purpose entities for infrastructure projects and short-term exposures from payment clearing. The Monetary Board has discretion to adjust the SBL limit based on public interest.

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    Single Borrower's Limit Rev

    Uploaded by

    Joey Sulte
    126 views2 pages
    Single Borrower's Limit (SBL) is a rule that limits a bank's credit exposure to a single borrower to 25% of the bank's net worth. This is intended to minimize credit risks for the bank in case of default. The SBL includes direct liabilities to the bank as well as liabilities of related entities and individuals. Certain types of loans are excluded from the SBL, such as those backed by government guarantees or collateral. Exceptions to the SBL include loans to special purpose entities for infrastructure projects and short-term exposures from payment clearing. The Monetary Board has discretion to adjust the SBL limit based on public interest.

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    Single Borrower's Limit (SBL) is a rule that limits a bank's credit exposure to a single borrower to 25% of the bank's net worth. This is intended to minimize credit risks for the bank in case of default. The SBL includes direct liabilities to the bank as well as liabilities of related entities and individuals. Certain types of loans are excluded from the SBL, such as those backed by government guarantees or collateral. Exceptions to the SBL include loans to special purpose entities for infrastructure projects and short-term exposures from payment clearing. The Monetary Board has discretion to adjust the SBL limit based on public interest.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    126 views2 pages

    Single Borrower's Limit Rev

    Uploaded by

    Joey Sulte
    Single Borrower's Limit (SBL) is a rule that limits a bank's credit exposure to a single borrower to 25% of the bank's net worth. This is intended to minimize credit risks for the bank in case of default. The SBL includes direct liabilities to the bank as well as liabilities of related entities and individuals. Certain types of loans are excluded from the SBL, such as those backed by government guarantees or collateral. Exceptions to the SBL include loans to special purpose entities for infrastructure projects and short-term exposures from payment clearing. The Monetary Board has discretion to adjust the SBL limit based on public interest.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    By : JKCR

    Single Borrower’s Limit (SBL)

     LIMIT CREDIT- Is a borrower’s limit that intends to limit credit exposure to a single client to a
    maximum of 25% of a bank’s net worth (total loan portfolio)

     MINIMIZE RISK- To minimize credit risks on the bank in the case of the borrower’s default.

     IMPOSE CEILING- Imposes a ceiling on the amount of loans, credit accomodations

    Gen Rule: Total Loans, Credit Accomodations, Guarantees = 25% of the banks’ net worth

    Basis: total credit commitment of the bank to the borrower (sec. 35.1 GBL)

    Gen Rule is subject to:

    1) MB discretion – public interest

    2) +10% - secured by trust receipts, shipping documents, warehouse receipts or other similar
    documents transferring or securing title covering readily marketable, non-perishable goods
    which must be fully covered by insurance;

    Exception to Gen Rule:

    1) Stand-Alone Projects –different SBL given by banks/QB for SPEs (Special Purpose Entities) in
    support of the government’s Build, Build, Build initiative (circular no. 976 BSP);

    2) Short-term exposures of banks and quasi-banks (QBs) to clearing and settlement banks arising
    from payment transactions (circular no. 965 BSP)

    >exposure is considered short-term if it does not extend longer than five (5) banking days
    after the placement of funds into the clearing and settlement account

    >The payment transactions giving rise to short-term exposures are carried out through a
    clearing and settlement account maintained with a designated local settlement bank, or a
    foreign settlement bank.

    -What SBL Includes:

     35.3The above prescribed ceilings shall include: (a) the direct liability of the maker or acceptor
    of paper discounted with or sold to such bank and the liability of a general indorser, drawer or
    guarantor who obtains a loan or other credit accommodation from or discounts paper with or
    sells papers to such bank; (b) in the case of an individual who owns or controls a majority
    interest in a corporation, partnership, association or any other entity, the liabilities of said
    entities to such bank; (c) in the case of a corporation, all liabilities to such bank of all subsidiaries
    in which such corporation owns or controls a majority interest; and (d) in the case of a
    partnership, association or other entity, the liabilities of the members thereof to such bank.

     prescribed by MB (35.4)

     35.6. Loans and other credit accommodations, deposits maintained with, and usual guarantees
    by a bank to any other bank or non-bank entity, whether locally or abroad, shall be subject to
    the limits as herein prescribed.

     35.7. Certain types of contingent accounts of borrowers may be included among those subject
    to these prescribed limits as may be determined by the Monetary Board.

    Excluded from SBL

     35.5. For purposes of this Section, loans, other credit accommodations and guarantees shall
    exclude:

    (a) loans and other credit accommodations secured by obligations of the Bangko Sentral
    or of the Philippine Government;

    (b) loans and other credit accommodations fully guaranteed by the government as to the
    payment of principal and interest;

    (c) loans and other credit accommodations covered by assignment of deposits maintained
    in the lending bank and held in the Philippines;

    (d) loans, credit accommodations and acceptances under letters of credit to the extent covered
    by margin deposits; and

    (d) other loans or credit accommodations which the Monetary Board may from time to
    time, specify as non-risk items.

    CASE:

    G.R. No. 194515


    SPOUSES OSCAR AND GINA GIRO NELLA, Petitioners,
    vs.
    PHILIPPINE NATIONAL BANK, Respondent.

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