Regulatory Alerts2021-09-14
Added
DFIM Circular No. 09: Master Circular: Loan/Lease/Investment Rescheduling for Financial Institutions
This circular establishes mandatory guidelines for financial institutions regarding the rescheduling of loans, leases, and investments, restricting rescheduling exclusively to accounts classified as substandard, doubtful, or bad. It defines specific time limits for extending repayment periods based on the rescheduling installment and account classification, and mandates minimum down payment percentages of 15%, 30%, and 50% for the first, second, and third installments, respectively. The document further prohibits the transfer of interest to income accounts for rescheduled loans, requires specific provisioning adjustments, and mandates the reporting of rescheduled accounts to the Credit Information Bureau (CIB). Additionally, it limits rescheduling to a maximum of three times, after which the borrower is classified as a willful defaulter, and supersedes previous circulars on this matter.