The Bangko Sentral ng Pilipinas has extended the effectivity of a temporary regulation that allows banks to lend more to firms investing in priority infrastructure projects of the government.
In a statement released Thursday, the BSP announced that it would extend the separate 25-percent single borrower’s loan (SBL) limit for three more years, or until 2016—the last year of the Aquino administration.
The regulation took effect in December 2010 and was supposed to lapse by the end of 2013.
SBL is the ceiling on the amount of loans a bank may extend to a single borrower. It is set at 25 percent of a bank’s net worth.
Two years ago, the BSP granted a separate 25-percent SBL limit for purposes of supporting infrastructure projects under the public-private partnership (PPP) program of the government.
The extension means that if a corporate borrower has an outstanding loan with a bank equivalent to 25 percent of the latter’s net worth, the same borrower can secure more loans from the same bank up to an amount equivalent to another 25 percent of the creditor’s net worth.
The additional loan, however, should be used to fund infrastructure projects under the PPP.
Under the PPP program, the government invites private enterprises to invest in public infrastructure projects to improve the country’s infrastructure.
Economic officials admitted that the Philippines needs to develop its infrastructure.
Businessmen often cite poor infrastructure in the country as a hindrance to investments, officials explained.—Michelle V. Remo