Rediscounting/eRediscounting System

December 2020

1. What is rediscounting?

Rediscounting is a privilege of qualified Bangko Sentral ng Pilipinas (BSP)-supervised banks

that have approved and active rediscounting line with the BSP to obtain loans or advances
from BSP using the eligible papers of its end-user borrowers (EUB) as collaterals. It is a
standing credit facility to help banks meet temporary liquidity needs by refinancing the loans
they extend to their clients.

2. How does the rediscounting cycle go?

A bank extends loans to EUBs who execute credit instruments [i.e., promissory notes (PNs),
drafts or bills of exchange (BX)] in favor of the bank. The bank rediscounts the credit
instruments of its EUBs by endorsing the same in favor of the BSP. The BSP, in turn, lends
the bank an amount equivalent to a certain percentage of the face amount/outstanding
balance of the EUB’s credit instrument.

3. What is the role of rediscounting in our monetary system?

Section 81 of the Republic Act (R.A.) No. 7653, as amended by R.A. No. 11211, otherwise
known as “The New Central Bank Act”, states that the rediscount, discounts, loans and
advances, which BSP is authorized to extend to banking institutions, shall be used to
influence the volume of credit consistent with its objective of price stability and maintenance
of financial stability. The BSP may extend three types of credit operations to banking
institutions, namely, normal credit operations [i.e., the BSP Rediscounting Facility through
the Electronic Rediscounting System (eRS)], special credit operations and emergency credit
operations. As a matter of policy of the BSP, the Lender of Last Resort (LOLR) principle shall
apply to all three (3) credit operations.

The BSP uses its rediscount facility as an instrument to influence the volume of credit in the
financial system and to act as the 1) short-term safety valve for the banking system when
the aggregate supply for reserves fall short of demand; or 2) when banking institutions meet
an unexpected shortage of reserves or funding for their temporary liquidity needs. The
rediscounting window does not aim to compete with the existing rediscounting facilities in
the market.

4. What is the Lender of Last Resort Principle?

The concept of LOLR generally refers to the role of central banks as providers of liquidity to
individual banks and the banking system as a whole when liquidity cannot be obtained from
market sources. A key principle of LOLR is that depository institutions should exhaust other
possible sources of funding first before going to the central bank. For rediscounting, the LOLR
principle is implemented through provision of loans exclusively for the purpose of meeting
short-term liquidity needs of the banks, which are appropriately priced based on changes in
BSP’s monetary policy goals and/or movements in the market interest rates.

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5. What are the types of rediscounting facilities?

Qualified BSP-supervised banks may avail themselves of the Peso Rediscount Facility and
Exporters’ Dollar and Yen Rediscount Facility (EDYRF).

6. What papers are eligible for rediscounting?

The following are among the papers eligible for rediscounting:

 Commercial Credits – credit instruments resulting from a) the importation, exportation,
purchase or sale of readily saleable goods and products, or their transportation within
the Philippines; or b) the storing of non-perishable goods and products which are duly
insured and deposited in authorized bonded warehouses or in other places approved by
the Monetary Board (MB); with maturities of not more than 180 days from date of
rediscount. The corresponding BSP rediscount loan may have a maturity of 180 days from
date of rediscount but shall not go beyond the maturity date of the credit instrument.
 Production Credits – credit instruments related to the production or processing of
agricultural, animal, mineral, or industrial products with maturities of not more than
360 days from date of rediscount. The corresponding BSP rediscount loan may have a
maturity of 180 days from date of rediscount but shall not go beyond the maturity date
of the PN. Renewable but not to exceed 180 days.
 Other Credits – special credit instruments not otherwise rediscountable under
Commercial and Production credits, such as but not limited to microfinance, housing
loans, services, agricultural loans with long gestation period, and medium and long-term
loans covered by credit instruments with maturities of not more than ten years from
date of rediscount, depending on the type of credit. The corresponding BSP rediscount
loan may have a maturity date of up to 360 days from date of rediscount but shall not go
beyond the maturity date of the PN (renewable depending on the type of credit).

7. What are the types of loans and acceptable underlying collaterals under each type of
credit? 1

With the exception of Trust Receipts (TR) and Export Bills (EBs), all loans are collateralized
by the PN between the bank and its EUB. This PN is assigned in favor of the BSP and is
supported by underlying collateral. TRs and EBs are likewise assigned in favor of the BSP, the
former being supported by the goods covered by the TR, and the latter by the assignment of
proceeds of export or domestic letters of credit (LCs), confirmed purchase orders (POs) or
sales contracts (SCs).

1
In view of the threats and negative impacts of the Corona Virus Disease 2019 (COVID-19) pandemic, temporary
measures were issued to continuously provide the needed liquidity to banks for purposes of maintaining price and
financial stability. Refer to FAQ No. 42(A.3) for the additional acceptable underlying collaterals with the BSP-DLC
for a temporary period during this extraordinary situation.

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Type of Credit Description Acceptable Underlying Collaterals

Commercial Credits
a. Export Credit a) Packing credit to fund the working capital Irrevocable LCs, and/or confirmed PO and/or SC
of exporters before the goods are shipped
b) EB credit (post-shipment) to re-finance Duly notarized assignment of proceeds of
export shipments while awaiting final export or domestic LCs, confirmed POs or SCs
payment from the foreign drawee bank
b. Import To fund the working capital of importers Usance BX secured by a TR Agreement,
Credit including United States Dollar (USD) -
denominated TRs covering importation of
goods and raw materials under the EDYRF
c. Trading & To fund the working capital of domestic Duly registered mortgage on real estate
Transport traders of readily saleable goods or their property, of which 70.0 percent of the
Loan transportation within the Philippines appraised value equals or exceeds the
outstanding balance of the PN, or domestic BX
secured by a TR Agreement, or credit
guarantees/ sureties issued by Industrial
Guarantee and Loan Fund, Small Business
Corporation (now collectively known as
Philippine Guarantee Corporation or
PhilGuarantee), Credit Surety Fund (CSF) and
the National Government (NG), or marketable
debt instruments issued by the NG and all its
instrumentalities, including Republic of the
Philippines USD-denominated bonds or ROPs,
which shall be secured by a duly notarized Deed
of Pledge
Production Credits
a. Agricultural To fund the activities of farmers for the Deed of Real Estate Mortgage (REM)
Production production of food crops (rice, corn, fruits
and vegetables, coffee), other crops
(coconut, abaca fiber, cotton, rubber, palm
oil, etc.) and fishery (fish and marine
products, aquaculture)
b. Animal To fund the activities of farmers for poultry Deed of REM
Production and livestock development (egg production,
broiler production, hog raising, weaning or
fattening, cattle raising or fattening, dairy,
goat raising)
c. Mineral To fund the activities of borrowers for the Deed of REM
Production production of metallic and non-metallic ore
mining/milling (bauxite, copper, gold
bullions/bars, iron ore, lead, manganese,
uranium, zinc, asbestos, coal, semi-precious
stones, clay, etc.)
d. Agricultural To fund the economic activities of borrowers Deed of REM
Processing involved in the manufacturing of processed
food (meat, fruits and vegetables, fish and
other sea foods, vegetable oils, starch from
indigenous raw materials, spices and other
processed foods)

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Type of Credit Description Acceptable Underlying Collaterals

e. Industrial Indirect Exports: To fund the working capital Local PO/domestic LC or Deed of REM. The
Processing needs of local manufacturers (cottage, small commodity covered by the local PO/domestic
and medium scale industries) that have LC should be ultimately exported or applied as
supply arrangements with direct exporters inputs to the production of goods to be
exported
Industrial Loans: To fund industries involved Deed of REM
in the manufacturing of wood products,
paper and paper products, textile and textile
products, wearing apparel, footwear, leather
and leather products, basic industrial
chemicals, chemical fertilizers, synthetic
resins, synthetic yarns and fibers, drugs and
pharmaceuticals, petroleum products,
rubber products, plastic products, non-
metallic mineral products, construction/
housing components, basic metal products,
fabricated metal products, machinery and
equipment, electrical and electronic products
Other Credits
a. Microfinance Small loans granted to the basic sectors, as Unsecured
defined in the Social Reform and Poverty
Alleviation Act of 1997, and other loans
granted to the poor and low-income
households for their micro enterprises and
small businesses so as to enable them to raise
their income levels and improve their living
standards
b. Service To fund the working capital of service Duly notarized assignment of receivables from
Exporters exporters who are engaged in rendering service contracts, the value of which equals or
technical, professional, and other services. exceeds the outstanding balance of the PN
“Service exporters” refer to natural persons
who are residents of the Philippines or
juridical persons organized and licensed
under Philippine laws engaged in rendering
technical, professional, and other services
abroad paid for in acceptable foreign
currencies
c. Other To fund the working capital of local industries Deed of REM or credit guarantees/ sureties
Services engaged in rendering various services issued by PhilGuarantee, CSF and the NG
(hospitals, schools, hotels and restaurants,
transportation, postal and communications,
call centers, research and development,
private educational services, health and
social work, computers and related activities,
sewage and sanitation, and recreational,
cultural and sporting activities, etc.)
d. Medium Loans covered by credit instruments with
and long- maturities of more than 360 days but not
term loa ns more than 10 years from date of rediscount
with the BSP.

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Type of Credit Description Acceptable Underlying Collaterals

Banks availing of the medium and long-term
facilities shall submit a quarterly report on
the projects, conduct end-user verification
and validate utilization of loan proceeds
annually

Eligible projects include, but are not limited Deed of REM

to, the following:
1) Housing loans for 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, e.g., construction
of roads, drainage, park, water system
and others
2) Agricultural loans with long gestation Deed of REM
period that become economically
productive and generate revenue only
after a minimum period of three years,
identified as follows:
Gestation
Project
in number 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
Jackfruit 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
3) Capital assets expenditure (CAPEX) for the Deed of REM or credit guarantees/ sureties
purchase, construction, expansion, or issued by PhilGuarantee, CSF and the NG
improvement of long-term assets used in
trade or business: e.g., factory,
warehouse, office building, machinery
and equipment, and transportation
equipment, including USD-term loans to
finance CAPEX (plant expansion/
modernization) by exporters under the

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Type of Credit Description Acceptable Underlying Collaterals

EDYRF provided they are booked under
regular banking units

4) Permanent working capital which refers Deed of REM or credit guarantees/ sureties
to the core level in trading assets issued by PhilGuarantee, CSF and the NG
(accounts receivable and inventory)
brought about by long term or rapid sales
growth or increased production capacity

8. Can syndicated loans and loans with underlying real estate collateral(s) under Mortgage
Trust Indentures (MTI) be accepted for rediscounting?

Yes. Under Section 282 of the Manual of Regulations for Banks (MORB), syndicated loans
may be accepted for rediscounting, subject to the following minimum requirements:
 The PN is negotiable;
 The master loan agreement allows the endorsement of the PN; and
 The opinion from the bank’s counsel(s) that the master loan agreement allows the
endorsement of the PN; that the PN is negotiable; and that no other act or approval is
necessary to perfect the endorsement.

Loans with underlying real estate collateral(s) under MTI may likewise be accepted, subject
to the following minimum eligibility requirements:
 The trustee must be a bank or quasi-bank authorized by the MB to engage in trust and
other fiduciary business;
 The bank must notify the trustee that it is assigning its participation to the BSP by way of
collateral;
 The bank must provide a certification specifying the following: current participations in
the MTI; that there is no senior claim to that of the prospective claim of BSP; and that it
does not violate any existing loan agreement with other creditors; and
 The trustee must provide BSP with a certified copy of the relevant collateral(s).

9. What loans are considered ineligible for rediscounting?

Under Section 282 of the MORB, the following loans cannot be rediscounted with the BSP:
a. Interbank loans;
b. Extended/Restructured loans;2
c. Past due loans;
d. Unsecured loans (except in cases identified below);
e. Personal consumption loans;
f. Loans to non-bank financial institutions; and

2
May be accepted as discussed in FAQ No. 42(A.3) on the additional eligible collaterals accepted by the BSP for
rediscounting for a temporary period in view of COVID-19 pandemic, subject to certain conditions.

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g. Loans funded from other borrowings, e.g., government financial institutions or

multilateral agencies.

However, pursuant to Circular No. 1083 dated 22 April 2020, as amended by Circular
No. 1100 dated 08 October 2020, loans that are granted to micro-, small- and medium-
enterprises (MSMEs) as defined under Section 332 of the MORB which were allowed as
alternative compliance with the required reserves against deposit and deposit substitute
liabilities should not be rediscounted with the BSP, among others.

The following unsecured loans, however, may be accepted for rediscounting provided they
are:
a. Microfinance loans; or
b. Unsecured loans secured by a duly registered mortgage on real property of the bank
(bank asset), 70.0 percent of the appraised value of which equals or exceeds the
outstanding balance of the unsecured PN, and other collaterals acceptable to the BSP,
e.g., marketable debt instruments issued by the NG and all its instrumentalities,
including ROP US$ denominated bonds.

10. What documentary requirements must be submitted by banks on the use of duly registered
mortgage on real property and government securities (bank assets) as underlying collaterals
for the rediscounting of unsecured loans with the BSP?

Pursuant to Section 282 of the MORB and as mentioned in the immediately preceding FAQ,
banks may use its own real property and marketable debt instruments issued by the NG and
all its instrumentalities (e.g. government securities) as underlying collateral for the
rediscounting of unsecured loans.

For real property, banks shall submit the following relevant documents for evaluation3:

a. Original Certificate of Title (OCT), Transfer Certificate of Title (TCT), or Condominium

Certificate of Title (CCT);
b. Tax Declaration;
c. Real Estate Tax Receipt for the current year and Tax Clearance;
d. For agricultural land measuring over five hectares, clearance from the Department of
Agrarian Reform;
e. Current insurance policy and official receipt evidencing payment of insurance premium
on improvements, if any;
f. Appraisal Report by an acceptable independent appraiser, dated not later than six
months from date of application; and

3
The procedures and documentary requirements on the use of duly registered mortgage on real property of banks
as underlying collateral for the rediscounting of unsecured loans are set forth under BSP Memorandum No.
M-2020-064 dated 17 August 2020. Refer to FAQ No. 42(B) on temporary measures to be followed for the duration
of the quarantine.

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g. Deed of REM – Bank Asset in favor of the BSP with the following attachments:
i) technical description of the properties mortgaged; and ii) copy of Board Resolution
authorizing the pledge/mortgage of the Bank’s property.

For government securities, the following conditions must be met:

a. Government securities must be tradeable, have maturities of not more than ten (10)
years from date of pledge; and be registered in the name of the borrowing bank; and
b. Borrowing bank has an account with the Bureau of the Treasury.

11. Can PNs secured by Certificate of Land Ownership Award (CLOA) and Emancipation Patent
(EP) be rediscounted with BSP?

No. Under BSP Memorandum No. M-2009-041 dated 04 November 2009, PNs secured
by a mortgage on CLOA or EP are not among the eligible papers acceptable
for rediscounting in view of the statutory prohibitions under Presidential Decree (PD) No. 27
or the act “Decreeing the Emancipation of Tenants from the Bondage of the Soil, Transferring
to them the Ownership of the Land They Till and Providing the Instruments and Mechanism
Therefor” and R.A. No. 6657 or the “Comprehensive Agrarian Reform Law of 1988”.

12. Can PNs secured by Original Certificate of Title issued by virtue of Free Patent be
rediscounted with BSP?

Yes. PNs secured by REM on Original Certificate of Title issued by virtue of Free Patent,
whether agricultural or residential lands, can be rediscounted with the BSP in accordance
with BSP Circular No. 1072 dated 31 January 2020.

13. What are the pertinent sections of the MORB and BSP Issuances that cover the BSP
Rediscounting Facilities?

The policies and guidelines on the BSP Rediscounting Facilities are covered by Section 281
on Rediscounting Line and Section 282 on Rediscounting Availments, of the MORB.

In addition, the BSP issued the following memoranda:

 M-2009-029 dated 14 August 2009, which provides the guidelines on the rediscounting
of medium and long term loans;
 M-2009-041 dated 04 November 2009, which provides that PNs secured by a mortgage
on CLOA or EP are not among the eligible papers acceptable for rediscounting in view of
the statutory prohibitions under PD No. 27 and R.A. No. 6657 (refer to FAQ No. 11);
 M-2009-057 dated 23 December 2009, which provides the guidelines on banks’ submission
of government securities as collateral to rediscounting loans provided by BSP;

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 M-2010-031 dated 22 September 2010, which advises all banks participating in the eRS
to encode in the system the complete and correct addresses of their borrowers whose
loans are being rediscounted with the BSP;
 M-2010-042 dated 06 December 2010, which provides the guidelines for thrift banks on
the rediscounting of packing loans and export bills with the BSP;
 M-2011-017 dated 18 March 2011, which provides the guidelines on real estate properties
covered by Section 7 of R.A. No. 26 offered as collateral for loans with the BSP;
 M-2012-004 dated 16 January 2012, which allows land titles with PD No. 1271
annotation as underlying collateral for loans offered for rediscounting with the BSP on
condition that: 1) the land titles submitted specifies that the original registration date
was on or before 31 July 1973; and 2) the land covered by titles are not within any
government, public or quasi-public reservation, forest, military or otherwise, as certified
by appropriate government agencies;
 Memorandum to all rediscounting banks dated 30 January 2012, posted in the eRS
website, which provides the guidelines on the custodianship of credit instruments and
underlying collaterals of banks authorized to hold these in trust in favor of the BSP;
 Memorandum to all rediscounting banks dated 30 January 2012, posted in the eRS
website, which provides the guidelines on the handling of rediscounted credit and
collateral documents by banks under depository/custodianship arrangement;
 Memorandum to all rediscounting banks dated 18 May 2012, posted in the eRS website,
which provides the guidelines on additional information on the appraisal report included
in the documentary requirements of rediscounting banks;
 Memorandum to all rediscounting banks dated 01 October 2013, posted in the eRS
website, which provides the additional documentary requirements for banks availing of
the BSP Rediscounting Facility;
 M-2020-016 dated 31 March 2020, which provides the guidelines on submission of
reports/documents and communications to the BSP-DLC during extraordinary situation;
 M-2020-024 dated 08 April 2020, which approves the additional eligible credit
instruments, revised loan documents and availment procedures for the BSP Rediscount
Facilities;
 M-2020-043 dated 18 May 2020, which approves the extension of the reduction of the
term spread on Peso Rediscounting loans and extension of the acceptance of the eligible
credit instruments;
 M-2020-051 dated 17 June 2020, which provides additional guidelines and clarifications
on (i) Bank Certification for submission to BSP; and (ii) Revised List of Accounts for
Rediscounting. Moreover, responses were provided on frequently asked questions on
Memorandum No. M-2020-024 dated 08 April 2020;
 M-2020-056 dated 16 July 2020, which provides the approved extension of the reduction
of the term spread on Peso Rediscounting loans, extension of the acceptance of the

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eligible credit instruments and reduction of the term spread on Exporters’ USD and
Japanese Yen (JPY) rediscounting loans until 30 September 2020;
 M-2020-064 dated 17 August 2020, which provides the approved documentary
requirements and procedures on the use of bank asset as underlying collateral for
rediscounting;
 M-2020-076 dated 29 September 2020, which provides the approved reduction of the
term spread on rediscounting loans, extension of the acceptance of additional eligible
credit instruments for rediscounting until 31 January 2021;
 M-2020-081 dated 22 October 2020, which provides the approved conduct of Off-site
Credit Verification as an alternative to On-site Credit Verification relative to availments
in the BSP’s rediscount facility; and
 M-2021-012 dated 05 February 2021, which provides the approved reduction of the term
spread on rediscounting loans, extension of the acceptance of additional eligible credit
instruments for rediscounting until 31 April 2021, subject to further extension as may be
approved by the MB, among others.

14. What eligibility criteria must be met by banks to qualify for rediscounting line?

a. Banks shall comply with the following requirements pursuant to Section 281 of the
MORB:

i. Minimum capital prescribed under Section 121 of the MORB based on the latest
available report of the Department of Supervisory Analytics (DSA);
ii. Capital Adequacy Ratio (CAR) as required under applicable and existing capital
adequacy framework, based on the latest available report of the DSA except those
with capital build-up program approved by the MB;
iii. Required reserves against deposit liabilities/deposit substitutes for two
consecutive weeks based on the latest available report of the DSA;
iv. Non-Performing Loans (NPL) ratio lower or equal to the industry average adjusted
upward by two percent based on the latest available report of the DSA, or the
allowable NPL ratio approved by the MB;
v. Positive Demand Deposit Account (DDA) balance with the BSP as of date of
application;
vi. No past due obligations or collateral deficiencies on account of matured
notes/unremitted collections/missing collaterals or ineligible papers with the BSP
as of date of application;
vii. A CAMELS composite rating of “3” or higher based on the latest general
examination of the appropriate supervising department of the BSP; and
viii. The ratio of past due direct and indirect loans to Directors, Officers, Stakeholders,
and their Related Interests to the aggregate past due loans should not be more
than five percent based on latest available report of the DSA.

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b. Banks applying for the microfinance facility shall also comply with the following
requirements based on the latest available report of the appropriate supervising
department of the BSP:

i. At least one (1) year track record in microfinance;

ii. At least 500 active microfinance borrowers;
iii. A portfolio at risk ratio (PAR) of not more than five percent (5%);
iv. The ratio of total collections (excluding prepayments) during the preceding
12-month period to total collectibles (past due microfinance loans beginning, plus
matured loans/principal amortizations due for the period) should not be less than
ninety-five percent (95%); and
v. Officers and staff responsible for microcredit operations shall have completed:
(1) a training course on microfinance; and (2) at least one-year experience in
microlending activities.

c. For newly merged or consolidated banks, a temporary line not exceeding fifty percent
(50%) of its adjusted net worth as of latest date may be granted for a period of 180 days
while awaiting the required reports/data from the appropriate supervising department
of the BSP, renewable for another 180 days or until such time that the required
reports/data are made available, whichever comes earlier, subject to the following
conditions4:
i. Compliance with the requirements cited under FAQ Nos. 14.a.v and 14.a.vi herein,
and other guidelines issued by the DLC; and
ii. One (1) of the merging or consolidating banks has CAMELS composite rating of at
least three “3” and minimum CAR of ten percent (10%) based on the latest
available DSA data.
However, in accordance with Section 1151 of the MORB on Regulatory Relief Policy, the BSP
may allow the relaxation of eligibility requirements by excluding the criteria on reserve
requirement for the renewal of rediscounting line and for the availment of rediscounting
loans from the date of declaration of state of calamity up to six months thereafter, among
others.

15. What documentary requirements must be submitted by banks when applying for a
rediscounting line?

Banks applying for a rediscounting line shall submit the following documents:

a. One original copy of DLC-prescribed Application for Rediscounting Line (DLC Form
No. 02-001-01), preferably printed on the bank’s stationery, indicating the amount of
Rediscounting Line applied for;

4
These conditions shall not limit the MB from granting rediscounting line incentives to merged/consolidated banks
pursuant to Section 104 of the MORB.

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b. One original copy of Secretary’s Certificate or Board Resolution duly signed by the Board
of Directors of the applicant bank, authorizing the bank to apply for a Rediscounting Line
with the BSP, indicating the amount applied for and designating at least two senior
officers of the bank (together with their specimen signatures) authorized to endorse PN
and sign all papers pertaining to rediscounting. For this purpose, banks shall observe the
following specific wordings in the preparation of the said documents:
“...to apply for a rediscounting line with the Bangko Sentral ng Pilipinas in the
amount of P_____”;
c. One original copy of the List of Board of Directors and principal officers (top three
executive officers) and their education/training, and work experience as of recent date;
d. One photocopy of Articles of Incorporation and amendments, if any (for new
applications5 only);
e. One photocopy of Organizational Chart (for new applications only).
f. One photocopy of Annual report/audited financial statement for the immediately
preceding year;
g. One original copy of a Certification dated at most one month prior to the date of filing of
application, preferably printed on the bank’s stationery, signed by any two of the
authorized officers indicated in item “b”, hereof:
i. If the bank has outstanding obligation/s – certification that the bank has no past due
obligation with all other financial and lending institutions, as enumerated therein;
or
ii. If the bank has no outstanding obligation – certification of no financial obligation
with other financial institutions;

h. One original copy from each financial institution of the Certification of good credit
standing prepared, issued and sent to BSP-DLC by all the financial and lending
institution/s enumerated in item “g”, hereof, and dated at most one month prior to the
date of filing of application for rediscounting line; and
i. For banks applying for microfinance facility, one photocopy of the Manual of Operations
pertaining to microfinance operations.
However, in accordance with BSP Memorandum No. 2020-016 dated 31 March 2020 and in
cases of extraordinary situation such as the community quarantine, banks may submit
rediscounting line application requirements via email at DLCmail@bsp.gov.ph or
eRediscounting@bsp.gov.ph, which shall be accompanied by a Certification, and submit
original copies upon request of BSP. Moreover, in lieu of FAQ Nos. 15.c to 15.f and 15.i
hereof, banks may instead submit a Certification signed by the President or Officer of
equivalent rank, and Chief Compliance Officer certifying that the bank has the said
documents which shall be made available, as applicable, when requested by BSP.

5
New applications from banks include those filed within the month immediately preceding the expiry of the line or
thereafter.

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16. Where can a bank file its application/re-application for rediscounting line? 6

The application/re-application for a rediscounting line shall be filed with the DLC, Room 215
Five-Storey Building, BSP Head Office, A. Mabini corner P. Ocampo, Sr. Streets, Malate,
Manila.

17. How early can a bank file for application/re-application for rediscounting line?

Banks with existing rediscounting line shall file its re-application at least one month prior to
the date of expiry of its rediscounting line. Re-application filed beyond this period will be
treated as a "new" application, in which case, the bank will be required to re-submit all the
documentary requirements for new applicants.

18. How long will the BSP process the application for rediscounting line?

The BSP will conduct preliminary assessment of completeness of documentary requirements

within five banking days upon receipt, and process the application for rediscounting line with
complete documentary requirements within 20 banking days pursuant to the BSP Citizen's
Charter, which may be accessed at:

https://www.bsp.gov.ph/CitizensCharter/bspcitizenscharter.pdf

19. What is the term of the approved rediscounting line?

The term of the regular line shall be for one year unless sooner cancelled, suspended,
amended or extended by the authorized approving body. The line is renewable annually
upon submission of application one month before the expiry of said line.

For newly merged or consolidated banks, a temporary line may be granted for a period of
180 days while awaiting the required reports/data from the responsible Department of the
Financial Supervision Sector (FSS), renewable for another 180 days or until such time that
the required reports/data are made available, whichever comes first.

20. How much is the amount of rediscounting line that may be extended by the BSP?

The regular rediscounting line ranges from 50.0 percent to 200.0 percent of adjusted net
worth depending on the total credit score of the applicant bank. On the other hand, newly
merged or consolidated banks may be granted, subject to compliance with the prescribed
conditions in Section 281 of the MORB, a temporary rediscounting line (i.e., for a period of
180 days while awaiting the required reports/data from the responsible Department of the
FSS, renewable for another 180 days or until the required reports/data are made available,

6
Under extraordinary situation such as the duration of the community quarantine period, submission of
reports/documents and communications may be done in accordance with BSP Memorandum Nos. M-2020-016
dated 31 March 2020 and M-2020-056 dated 16 July 2020. Refer to FAQ No. 42(B).

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whichever comes first) not exceeding 50.0 percent of its adjusted net worth based on the
latest available data from the DSA of the FSS.

21. What are the eligibility requirements at the time of availment?

As provided under Section 282 of the MORB, banks availing of the BSP Rediscounting Facility
must have the following at the time of availment:

a. A positive DDA balance;

b. No past due obligations;
c. No collateral deficiencies on account of matured notes, unremitted collections, missing
collaterals or ineligible papers; and
d. No chronic reserve deficiency in deposit/deposit substitute liabilities immediately
preceding the loan drawdown/availment.

In determining compliance with the reserve requirement, a bank will be considered

non-compliant with the reserve requirement for the reference week when its actual net
reserve position for said reference week cannot be determined due to delayed submission
or non-submission of the relevant reserve report.

The BSP expects the banks to continually observe the above eligibility requirements while
the line is active.

22. What are the documentary requirements when availing under the BSP Rediscounting
Facilities?

Pursuant to BSP Memorandum No. M-2020-016 dated 31 March 2020, banks shall submit a
letter request (signed and certified by the authorized officer of the bank) indicating the
amount to be borrowed and the purpose of availment thereof to DLCmail@bsp.gov.ph and
eRediscounting@bsp.gov.ph, addressed to the Director, Department of Loans and Credit,
Bangko Sentral ng Pilipinas, A. Mabini St. Malate, Manila.
Further, in accordance with BSP Memorandum No. M-2020-024 dated 08 April 2020, all
rediscounting banks are required to submit the following for all availments under the BSP
Peso Rediscount Facility and EDYRF on the following instances:

a. Prior to drawdown
i. Signed and notarized Supplemental Rediscounting Line Agreement; and
ii. Certified true copy of PN between the bank and EUB with endorsement; and

b. Upon notice by the BSP

i. Certified true copies of consent of EUB to the possible endorsement or similar
commercial transactions of their PNs with the BSP, with the prescribed wording in
BSP Memorandum No. M-2020-024 dated 08 April 2020.

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For banks which intend to submit the required original documents pertaining to
rediscounting availments, the DLC shall accept such documents at the BSP Head Office
subject to procedures stated in FAQ No. 42(B).

23. Upon receipt of confirmation of loan approval and release of loan proceeds, what should
the bank do?

Upon receipt of confirmation of loan approval with simultaneous release of loan proceeds,
the bank shall execute the following:

 PN in favor of the BSP; and

 List of Rediscounted Loans or Rediscount Schedules duly acknowledged by the
depository/custodian bank.

Banks may send, through e-mail, the scanned copy of the aforementioned documents at
eRediscounting@bsp.gov.ph.

For universal/commercial or thrift banks, the rediscounted credit instruments with

endorsement and underlying collaterals together with the duly accomplished and
Promissory Note in favor of the BSP and List of Rediscounted Loans or Rediscount Schedules
shall be held in trust, segregated, and kept at a secured place within its premises.

For rural or cooperative banks, the rediscounted credit instruments with endorsement and
underlying collaterals together with the PN in favor of the BSP and List of Rediscounted Loans
or Rediscount Schedules shall be deposited with its designated depository/custodian bank
not later than the next banking day from date of loan grant. The bank shall ensure that
receipt of the said documents is duly acknowledged by the authorized representative of the
depository/custodian bank by having the latter sign the List of Rediscounted Loans or
Rediscount Schedules and indicate the date of receipt of the documents. Pursuant to BSP
Memorandum No. M-2020-016, for rural or cooperative banks without custodian bank, the
rediscounted collateral documents and related documents should be deposited to the
nearest BSP Regional Office/Branch in view of the extraordinary situation such as the
duration of the community quarantine period.

Nevertheless, banks are advised to maintain scanned copies of rediscounted credit

instruments and underlying collaterals to facilitate the conduct of credit verification by the
BSP.

24. What interest is charged by the BSP against the rediscounting loan? 7

The interest rate charged by BSP on the rediscounting loan is called the rediscount rate.
BSP Circular No. 1071 dated 08 January 2020 provides the revised Rediscount/Lending Rates

7
Refer to FAQ No. 42(A.1 and A.2) for the temporary reduction in the term spread on Peso rediscount facility and
EDYRF, respectively, in view of COVID-19 pandemic.

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for loans under Peso Rediscount Facility/EDYRF. The Peso rediscount rates are based on the
latest BSP overnight lending rate plus a spread depending on the term of the loan.

Meanwhile, the EDYRF rates are based on the 90-day LIBOR plus a spread depending on the
term of the loan. The applicable spread for the rediscounting loan vis-à-vis the base rate,
may change periodically to align with changes in the BSP’s monetary policy objectives and
reflect market interest rate movements.

Current rediscount rates may be accessed8 at https://ursls.bsp.gov.ph/ursls or email inquiry

may be sent to DLCmail@bsp.gov.ph.

25. What is the maximum amount of rediscount that can be availed of by a qualified bank with
the BSP?

An eligible bank may avail up to 100.0 percent of its rediscounting line, provided all
rediscounting loans are fully collateralized subject to prevailing rediscounting policies.

26. What are the terms of BSP rediscounts?

Under Section 282 of the MORB, the maturities of BSP rediscounts are as follows:

Type of Credit Maturity Date

a. Commercial Credits 180 days from date of rediscount but shall not go beyond the maturity
(1) Export Packing date of the credit instrument.
(2) Trading
(3) Transport
(4) Quedan
(5) EBs
At Sight Fifteen (15) days from date of purchase.
Usance EB Term of draft but not to exceed sixty (60) days from shipment date.
b. Production Credits 180 days from date of rediscount but shall not go beyond the maturity
date of the PN. Renewable, not to exceed 180 days.
c. Other Credits Up to 360 days from date of rediscount but shall not go beyond the
maturity date of the PN (renewable depending on the type of credit).

27. What is the Electronic Rediscounting System?

Electronic Rediscounting System (eRediscounting System or eRS) is an online, internet-based

rediscount facility of the BSP available to all qualified banks nationwide. This facility allows
qualified banks to conduct their rediscounting transactions in their place of business on near
real-time basis. Such may be accessed9 at https://ursls.bsp.gov.ph/ursls.

8
May be accessed only by eRS users with valid web certification issued by the BSP.
9
Ibid.

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28. What is the loan value of eligible papers?

Under Section 282 of the MORB, the loan value of all eligible papers shall be 80.0 percent of
the outstanding balance of the EUB’s credit instrument (but not higher than 70.0 percent of
the appraised value if the underlying collateral is covered by Deed of REM).

29. What documentary requirements must be submitted by banks when applying to

participate in the eRS?

Qualified banks must request to participate in the eRS to be able to conduct their
rediscounting transactions and inquiries with the BSP at the convenience of their bank
premises. The banks must submit the following documents:

a. One original copy of the Application for Participation in the Electronic Rediscounting
System (DLC Form No. 02-002-01);
b. Four original copies of duly signed and notarized Electronic Rediscounting System
Participation Agreement (ERSPA) (DLC Form No. 02-002-02);
c. Two copies (at least one copy is original) of the Board Resolution authorizing the bank to
participate in the eRS;
d. Two copies (at least one copy is original) of Notarized Secretary’s Certificate on the
minutes of Board meeting authorizing the bank to participate in eRS;
e. Two original copies of User Account Registration Form (DLC Form No. 02-002-03); and
f. For Rural/Cooperative Banks only - six original copies of duly signed and notarized
Depository/Custodianship Agreement (DLC Form No. 02-002-06).
For banks which intend to submit the required original documents, the DLC shall accept such
documents at the BSP Head Office subject to procedures stated in FAQ No. 42(B).

30. How long will it take for BSP to process a request to participate in eRS?

The BSP will evaluate and process the request to participate in the eRS within three banking
days upon the receipt of complete documentary requirements pursuant to the BSP Citizen's
Charter which may be accessed at:

https://www.bsp.gov.ph/CitizensCharter/bspcitizenscharter.pdf

31. What are the features and capabilities of the eRS?

The eRS provides an online data entry facility for rediscounting transactions and inquiries
with the following features and capabilities:

 Online submission to BSP of loan applications by applicant banks;

 Online processing of rediscounting loan applications and payments;

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 Online data validation;

 Online access to historical rediscounting information on loans, PNs, borrowers,
collaterals, payments, rediscount rates, and rediscounting lines;
 Online information on available rediscounting line, rediscount rates, and existing and
new regulations on rediscounting;
 Electronic processing by BSP providing real-time online status of loan applications;
 Online access to various rediscounting forms like PNs, User Account Registration Form,
User Account Change Form and Incident Report Form;
 Online acceptance of payments to BSP on rediscounting loans guided by the “query”
window for outstanding loan balances and charges;
 Role-based and approval workflow from the client side;
 Secured data transmission and automatic generation of accounting entries at BSP;
 Maintainable system formula, valuation rates, access rights, system options and coding
scheme libraries;
 Embedded validation rules which immediately prompt on the correctness and
acceptability of PNs and other collateral documents; and
 Automatic debit of bank’s DDA with BSP covering the maturing Peso rediscounting loans
of the bank.

32. What are the minimum system requirements?

 Operating System – Windows 7 or higher;

 Internet Browser – Internet Explorer version 8 or higher; and
 Security – Token Card.

33. How will the bank know if the loan application or request for availment in the eRS has been
approved by the BSP?

The bank may view the status of its loan application online under the BSP Responses module
of the eRS. Notice and details of the loan approval or disapproval may be viewed upon
clicking the message of a specific loan bank reference. BSP’s response on payment
instruction submitted by the bank may likewise be viewed online.

34. How will the bank submit its loan application or request for availment if the eRS is not
accessible or if the loan to be rediscounted is considered as those temporarily accepted by
the BSP based on recently approved issuances?

For rediscounting of credit instruments which may not be performed through the eRS
[e.g. additional eligible credit instruments discussed under FAQ No. 42(A.3)] or where such
system is not accessible, such may be submitted to BSP-DLC through email at

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DLCmail@bsp.gov.ph and eRediscounting@bsp.gov.ph and processed following the

procedures set forth in BSP Memorandum Nos. M-2020-016, M-2020-024 and M-2020-051.

35. How are the rediscounting loan proceeds released to the bank?

The proceeds of the rediscounting availment shall be released as follows:

 Peso Rediscounts – automatically credited to the bank’s DDA or its depository/custodian

bank’s DDA with the BSP on the same day for loan application submitted to the BSP
before 4:00 p.m., during regular banking days, or cut-off time as advised by BSP.

 USD/JPY Rediscounts – released for credit to the designated foreign correspondent bank
of the rediscounting bank as follows:
a. Same banking day credit for dollar loan application submitted to the BSP before
11:00 a.m., during regular banking days, or cut-off time as advised by BSP; and
b. Following banking day credit for yen loan application submitted to the BSP before
11:00 a.m., during regular banking days, or cut-off time as advised by BSP.

36. How do banks pay their rediscounting loan obligations with the BSP?

Payments may be effected as follows:

a. Peso Rediscounts

The loan value of the rediscounted credit instruments or the amortization plus interest
due thereon shall be debited automatically against the bank’s DDA with the BSP at
maturity/amortization due date. For microfinance loans with daily, weekly or semi-
monthly amortizations, the bank’s DDA shall be debited on the last amortization due
date of said month for the total loan value of the amortizations for the month plus
interest due thereon.

b. USD/JPY Rediscounts

USD and JPY-denominated loans shall be repaid in the same currency under which they
were released. The bank shall submit through the eRS the details (e.g. amount and value
date) of its SWIFT payment instruction to its designated correspondent bank one banking
day before the maturity date of the loan. Should there be a deficiency in payment, the
bank’s DDA shall be debited with the peso equivalent of such deficiency. If the foreign
currency denominated loan is not settled on maturity date, the bank’s DDA with the BSP
shall be debited automatically on the due date with the peso equivalent of the matured
obligation plus accrued interest due thereon. However, the foreign exchange (FX)
conversion rate at the time of the loan repayment shall not be lower than the FX
conversion rate at the time of loan availment. Hence, any FX loss arising from default or

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repayment shall be for the account of the borrower. Accordingly, the bank should
maintain sufficient balance in its DDA to cover its maturing obligations.

For payments collected by the bank from its EUB prior to the maturity date of the credit
instrument, the bank shall submit its payment instruction to BSP, thru the eRS, within five
banking days from date of receipt of collection. The amount to be paid shall be equivalent
to the loan value of the principal amount collected plus interest due thereon and shall be
remitted to the BSP without need of demand. This express trust agreement and obligation
to remit shall subsist until the full payment of the obligation and shall be deemed
extinguished if the DDA of the bank has sufficient funds to cover the outstanding obligation.

In the event that the EUB whose PN had been endorsed to the BSP becomes a debtor of the
bank under a separate or different account, any and all payments made by the EUB under
said account shall, as between the BSP and the bank, be conclusively deemed to apply first
to the obligation of the bank with the BSP and shall be covered by the express trust
agreement and obligation to remit under the preceding paragraph.

37. How will the banks know that their rediscounting loan payments are received and taken
up by the BSP?

The bank may view in the eRS, under the BSP Responses module, the application of payments
for the matured loans or amortizations automatically debited for the day or prepayments
submitted to the BSP before 4:00 p.m., during regular banking days, or cut-off time as
advised by BSP. The corresponding Notice of Payments Taken Up and Notice of Release of
Fully Paid Collaterals, or Notice of Release of PN with Transfer of Collateral, in case the
collateral is used to secure another loan, are issued in the BSP Responses on the following
day after a credit instrument is fully paid by the bank.

38. Is there a cut-off time for the submission of rediscounting loan transactions by the bank?

A bank may submit to BSP, through the eRS, its loan application and loan payments from
8:00 a.m. to 4:00 p.m. during regular banking days, except when there is suspension of
government work, during which, the cut-off time will be adjusted accordingly. In cases of
government work suspension/reduced work hours, an advisory will be issued on the
adjustment of the cut-off time. Inquiries regarding work hours may be sent to
DLCmail@bsp.gov.ph.

39. How will banks report issues/concerns regarding access to the eRS?

In the event that the bank’s access to eRS becomes expired or blocked, the bank’s authorized
user may send a request to reset the password through the eRediscounting@bsp.gov.ph or
DLCmail@bsp.gov.ph.

Other system-related concerns may also be sent or coursed through

eRediscounting@bsp.gov.ph or DLCmail@bsp.gov.ph.

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40. What is the basis in determining eligible banking days in processing transactions under the
eRS?

The eRS conforms with BSP Memorandum No. M-2021-001 dated 04 January 2021 on
Amendments to the Standard Operating Procedures for Philippine Holidays in determining
holidays/non-working days and accordingly “banking” days.

41. Are local non-working holidays excluded from the five banking days within which collection
from rediscounted credit instruments should be remitted?

No. Local non-working holidays are not among those identified under BSP Memorandum No.
M-2021-001 dated 04 January 2021 as eligible holidays/non-working days, thus, such are still
included in the determination of the five banking days within which collection from
rediscounted credit instruments should be remitted to the BSP.

42. What are the temporary measures and procedures issued relative to the COVID-19
Pandemic?

As the Philippines continues to face the negative impact of the current global health
emergency brought about by COVID-19 which had turned into a full-scale pandemic in
mid-March 2020, the following measures were adopted by the DLC to complement the NG’s
broader initiatives to mitigate the economic impact of the pandemic:

A. Up to 30 April 2021, subject to further extension as may be approved by the MB pursuant

to BSP Memorandum No. M-2021-012 dated 05 February 2021:

1. Reduction of the term spread on Peso rediscounting loans relative to the BSP’s
Overnight Lending Rate to zero, regardless of maturity (i.e., 1-180 days);

2. Reduction of the spread on rediscounting loans under the BSP’s EDYRF, thereby
reducing the applicable USD and JPY rediscount rates to the 90-day LIBOR, or in its
absence, an applicable benchmark rate, such as Secured Overnight Financing Rate,
plus 200 basis points, regardless of maturity (i.e. 1-360 days);

3. Acceptance for rediscounting with the BSP:

 Under the EDYRF – USD- and JPY-denominated credit instruments related to
economic activities allowed to operate by the Department of Trade and
Industries during the enhanced community quarantine of Luzon per its
Memorandum Circular No. 20-08 dated 20 March 2020, except for loans to banks
and capital markets; provided, that these credits are booked under the regular
banking unit of the rediscounting bank and are compliant with the requirements
on eligible papers and collaterals under Section 282 of the MORB; provided,
further, that the said USD and JPY-denominated credits are only to those EUB
who are operating during the enhanced community quarantine;

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 Under the Peso Rediscount Facility and EDYRF – Credit instruments compliant
with the requirements on eligible papers and collaterals under Section 282 of the
MORB, which were granted one-time sixty (60)-day grace period, or longer as
may be mutually agreed by the parties, pursuant to Section 4(uu) of R.A.
No. 11494, otherwise known as "Bayanihan to Recover as One Act" subject to the
submission of certification signed by the authorized officer(s) of the bank stating
that the maturities of said credit instruments were extended pursuant to R.A.
No. 11494.10

B. Availment and submission procedures set forth under Memorandum

Nos. M-2020-016 dated 31 March 2020, M-2020-024 dated 08 April 2020, M-2020-051
dated 17 June 2020, M-2020-056 dated 16 July 2020 and M-2020-064 dated
17 August 2020.

In accordance with BSP Memorandum No. M-2020-016 dated 31 March 2020,

scanned copies of reports/documents and communications shall be submitted to
BSP-DLC through DLCmail@bsp.gov.ph and eRediscounting@bsp.gov.ph.

For rediscounting of credit instruments under EDYRF which may not be performed
through the eRS, the application may be submitted to and processed by DLC
following the procedures set forth in Attachment 1 on Procedures for Availments
through Manual Processing of Memorandum No. 2020-024 dated
08 April 2020. All rediscounting banks are required to submit the documents set forth
in Memorandum No. 2020-024 for all subsequent availments under the BSP Peso
Rediscount Facility and EDYRF prior to drawdown, after release of proceeds and upon
notice by BSP.

Moreover, for banks which intend to submit the required original documents for
rediscounting applications, the DLC shall accept these at the BSP Head Office.
However, banks are required to send an e-mail to DLCmail@bsp.gov.ph regarding
such intention one day before the actual submission and to wrap the documents in
a plastic cover, which shall be removed and disposed of after disinfection. The banks’
representative should also observe necessary precautions, such as wearing of face
mask and physical distancing, and subject themselves to the BSP’s health screening
protocols upon submission of original documents.

For banks using duly registered mortgage on real property (bank asset) as underlying
collateral for the rediscounting of unsecured loans with the BSP, the following
temporary measures are allowed for the duration of the quarantine in view of the

10
Superseded the acceptance for rediscounting with the BSP of credit instruments, which were granted mandatory
30 day grace period pursuant to Memorandum No. M-2020-017 dated 01 April 2020 and Section 4(aa) of R.A.
No. 11469, otherwise known as “Bayanihan to Heal as One Act”, and its Implementing Rules and Regulations.

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possible limitations in the operations of the Registry of Deeds and the difficulty of
procuring an independent appraisal due to quarantine restrictions:

a. The bank shall submit an undertaking to cause the registration of the REM on the
real property in the name of the bank within a reasonable time as determined by
DLC. Failure of the bank to register within the said period will cause the related
loan to become due and demandable; and
b. Acceptance of the latest available appraisal report on the real property, either by
the bank’s internal appraiser, or an independent appraiser, but prepared not
more than three years ago, for purposes of determining the value of the real
property in the name of the bank which will serve as basis in determining the
loanable amount, subject to review by licensed appraiser of the DLC.

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