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By Chino S. Leyco, Reporter
THE Monetary Board has relaxed the limits on
bank exposure to the real-estate industry, the Bangko Sentral ng
Pilipinas said Friday.
The BSP’s policy-making body has imposed a
single 20 percent overall limit on the real-estate lending of
universal and commercial banks. The new limit will provide a prudent
safeguard against over concentration of credits to commercial
lending, it said.
“It is expected to provide them with more
flexibility in delivering credit to high priority areas, such as
infrastructure development and construction of residential
properties,” the BSP said.
Thrift banks and rural or cooperative banks
whose traditional market niches are residential property loans or
mortgage financing and agriculture or cooperative loans,
respectively, are not subject to limits.
Under the new rule, loans for the construction
of public infrastructure are excluded from the definition of
real-estate loans and consequently from the 20-percent loan limit.
From a risk management perspective, public
infrastructure projects like roads, bridges and railways have a very
different risk configuration relative to commercial property
development which is more susceptible to speculative motivations,
the BSP said.
Housing loans to individual households,
regardless of amount, as well as loans extended to real estate
developers for the construction of socialized and low cost
residential properties under various government housing programs
have also been excluded from the limit.
“This is to sustain the government’s
National Shelter Program aimed at addressing the country’s chronic
housing shortage but without prejudice to the BSP’s prudential
stance considering that the loans shall continue to be subject to
the strict underwriting standards and the prescribed limits on loan
amount that may be granted relative to the value of the
collateral,” the central bank said.
Real-estate loans guaranteed by the Home
Guaranty Corp. or collateralized by nonrisk assets shall remain
excluded from the limit, the BSP said.
It said the new rules also exempt trust
department of banks because besides observing the “prudent man’s
rule” in administering, holding and managing the funds and
properties of trust, the trustee-bank does not really assume credit
risk. The assets received in trust or in any other fiduciary
capacity are administered in accordance with the terms and
conditions of the fiduciary agreement.
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