BSP Circular No.
1087
Alternative Compliance with the Reserve Requirements on Banks
Allowable modes of alternative compliance:
BSP Provisions
Peso-denominated loans only
MSME Granted, renewed or restructured after
March 15, 2020
An MSME Loan that was granted on or before
March 15 but has been renewed or
restructured after March 15, 2020: Provided,
that the bank demonstrates an increase in its
MSME loan portfolio during the month
preceding the reserve day
Large Enterprise Granted, renewed or
restructured after March 15, 2020
Execution
 Foreign Regular (Trade) & FCDU loans not
qualified
 Amount valued at amortized costs (O/S, net
of UID)
 Loan releases to new clients automatically
qualifies as reserves cover
 Loan releases within the existing lines not
qualified as cover based on initial discussion,
(can we consider if line is not fully availed)
Under the new guidelines, releases within
existing lines will qualify.
 Loan releases due to additional lines qualifies
as reserves cover
 Loans renewed and restructured eligible as
cover if MSME portfolio demonstrates an
increase versus last month
 Outstanding balance daily versus last month
portfolio
Suggest a separate tracking for restructured
loans as some might include capitalized
interest so any increase attributed to cap.
Int. will not qualify
 Loan releases to new clients eligible as
reserves cover if meets the ffg criteria:
1) business critically –impacted by covid19
i.e. transport industry, tourism industry
and export-import industry
2) Liabilities has become more than its
assets
3) Or it has experienced at least 50% decline
in gross receipts for at least one calendar
quarter; and in either instance, is
generally unable to pay or perform its
obligations as they fall due in the
ordinary course of business, as a result if
the Covid-19 outbreak, or as determined
by the appropriate regulatory agency
4) Conglomerate structure excluded
We can use the covid questionnaire/CARE
assessment forms which bucketed accounts
 based on severity of impact as basis. Let’s
discuss with Bennett. The challenge is getting the
latest financial statements. Question: do we just
use audited or can we use reconstructed FS?

A loan to a large enterprise that was granted on
or before March 15 but has been renewed or
restructured after March 15, 2020: Provided,
that the bank demonstrates an increase in its
MSME loan portfolio during the month
preceding the reserve day
Not encumbered in any way, or rediscounted
with the BSP or earmarked for any other
purpose
 If meets the criteria, the Large portfolio
should demonstrates an increase versus last
month before it qualifies as reserves cover
 Outstanding balance daily versus last
month’s portfolio
 Loans used as reserves cover not to be
rediscounted with the BSP

The use of MSME loans as allowable alternative

compliance with the reserve requirement shall
be available to banks from April 24, 2020 to
December 30, 2021.

The use of large enterprise as allowable

alternative compliance with the reserve
requirement shall be available to banks from
May 29, 2020 to December 30, 2021

Proposed processes

Activities Responsible Person Deadlines

 Process FRP Loans & Trade hand-off files using Regulatory Reporting Dept Daily – 10:00 a.m.
the regulatory system to identify MSME & Large (RRD)
Enterprise based on asset size
 Extract outstanding balance, net of UID of RBU
Peso loans granted after March 15

 Extract daily loan releases from Finacle Credit & Loans Services Daily – 10:00 a.m.
 Tag new loan releases to new clients Dept
 Email to RRD

 CBG to provide accounts under a conglomerate Corporate Banking Group

structure
 Create a Conglomerate library to be used in Management Accounting
identifying accounts under a conglomerate Dept
 structure

 Group new loan releases as to MSME and Large RRD Daily – 2:00 p.m.
Enterprise
 Tagged new loan releases to identify eligible
accounts as to:
1) New loan release to new customer
2) Renewals and restructured
3) Provide list of eligible accounts to CBG &
SME BG for validation

 CBG & SME BG to review and confirm eligible CBG / SME BG Daily 3:30 p.m.
accounts as reserves cover
 Provide confirmation to RRD of accounts
eligible as cover

 Email total amount of loans eligible as cover to: RRD Daily 4:00 p.m.
1) Treasury Liquidity
2) FS Department in charge of the calculation
of Reserves on Deposit Liabilities
3) CLSD to ensure that accounts used as
reserves cover will not be included in the
list of accounts for rediscounting to the BSP