BSP extends support to energy sector
The Bangko Sentral ng Pilipinas (BSP) will continue to support the country’s energy sector by giving banks more elbow room to finance capital-intensive operations of oil importers and power plant operators.
In a new circular released this week, the central bank extended by a year the relaxation of the 25-percent single borrower’s limit (SBL), which allowed banks to lend more to energy firms.
In 2011, the BSP liberalized rules on lending to oil companies and firms engaged in power generation by increasing banks’ SBL to 40 percent.
This means that a bank may lend as much as 40 percent of its net worth to a single company in the energy sector, provided that the power firm meets its credit standards.
The relaxed SBL rule was supposed to end this year, but the BSP decided to extend it until March 2014.
“The additional 15 percent shall only be allowed for a period of three years, from March 3 2011 or until March 3, 2014,” BSP Circular 803-2013 showed.
The regulator cited the importance of ensuring “adequate supply of oil and other petroleum products” in the country to support the economy.
“Additional loans, credit accommodations, and guarantees outstanding as of the end of the three-year period and in excess of the 25 percent of the lending bank’s net worth shall not be increased but shall be reduced and, once reduced, said exposures shall not be increased further,” the BSP explained.
The central bank relaxes lending rules for certain industries from time to time to respond to the country’s various needs.
